Europe Hardens Against Trump With United Stand on Trade and Iran

European Union leaders presented a determined front to stand up to U.S. President Donald Trump’s threats to penalize EU businesses and scupper the Iran nuclear deal.

At a dinner in the Bulgarian capital Sofia, the bloc’s 28 leaders were united in the face of what EU President Donald Tusk called the “capricious assertiveness” of the Trump administration.

On trade, all agreed to back the European Commission’s insistence that it won’t negotiate unless the U.S. grants a permanent exemption from tariffs on steel and aluminum, according to an EU official present. Tusk told leaders that the EU will continue fighting for the rules-based international system, despite recent U.S. decisions on climate change, tariffs and on Iran, the official said.

Europe’s mood is shifting from shock at Trump’s “America First” agenda to a resolve to close ranks and assert its own position. Trans-Atlantic tensions came to a head with the U.S. president’s decision announced last week to pull out of the landmark Iran nuclear accord which the remaining signatories -- Russia, China, France, Germany and the U.K., along with the EU -- all say is working.

“Europe must do everything in its power to protect, in spite of today’s mood, the transatlantic bond,” Tusk told reporters on Wednesday in Sofia. “But at the same time we must be prepared for scenarios where we’ll have to act on our own.”

Leaders including German Chancellor Angela Merkel and French President Emmanuel Macron agreed that the commission, the EU’s executive, is prepared to discuss trade concerns with the U.S. including deepening energy ties and reform of the World Trade Organization once a permanent waiver is in place, the official said. The bloc would also discuss WTO-compatible ways to improve reciprocal market access for industrial products including cars to avoid a trade war.

Merkel, Macron and British Prime Minister Theresa May were due to brief fellow leaders on Iran, after failing to persuade Trump to stick with the accord. The EU agreed to begin work to protect European companies negatively affected by the U.S. decision to withdraw and reimpose sanctions, while also addressing concerns about Iran’s ballistic missile program and wider role in the Middle East.

The EU’s proposals are its most assertive yet in dealing with the U.S., whose withdrawal from the 2015 agreement threatens to scupper the treaty and has worried leaders it could put Iran back on a path to developing nuclear weapons.

EU discussions on how to keep the deal -- and economic relations with Iran -- alive, have focused on: keeping Iran’s oil and gas industry viable; the creation of special purpose vehicles to allow for transactions between the regions; developing more contracts between European companies and their Iranian counterparts; and how to protect European firms that continue to work with Iran.

The EU has discussed instituting a so-called blocking statute, which would shield European companies doing business with Iran. The last time the bloc threatened to use this measure was in 1996, when Bill Clinton’s administration stood down and agreed to waive sanctions aimed at curbing foreign investment in Cuba, Iran and Libya.

The proposed EU actions are no guarantee that the accord can be salvaged, however, with the U.S. Treasury Department saying companies with existing contracts will have 90 to 180 days to extract themselves from their Iran dealings before becoming subject to penalties.

“Which company is going to risk access to the U.S. market, which is 100 times larger,” Ardavan Amir-Alsani, a Paris-based lawyer who specializes in Iran, said in an interview. “No one will choose Iran over the U.S. The deal is dead.”

EU leaders meeting in Sofia ahead of Thursday’s summit agreed to stick to the accord as long as Iran holds to its side of the deal.

“We don’t want to see this agreement destroyed because it is important for maintaining peace in the region and also for peace in the whole world,” Commission President Jean-Claude Juncker told reporters in Brussels earlier.