Tariffs may provide the impetus needed to enhance Europe’s single market. Businesses like Umicore, a materials group that manages electronic scrap and other waste, face challenges navigating an intricate web of national shipment rules while trying to move materials across the European Union. This dilemma extends beyond Umicore, affecting numerous companies that encounter obstacles akin to tariffs. Analysts suggest that the tariffs imposed by U.S. President Donald Trump have inadvertently supported the EU’s goal to establish a cohesive single market.
Umicore’s case illustrates a significant concern, as the company recycles 17 of the 34 minerals deemed critical for the EU’s green and digital transition. The logistics can be cumbersome; shipments often require transitions between rail and boat transport, along with various forms of documentation. The internal barriers resulting from diverging waste shipment regulations contribute to the complexity and costs of doing business within the EU. The International Monetary Fund estimates that these barriers equate to tariffs of 44% on goods and 110% on services, far exceeding the U.S. tariffs.
Eliminating these internal hindrances could significantly mitigate the effect of U.S. tariffs on EU businesses. The barriers extend to services as well, with numerous regulations complicating the establishment of foreign subsidiaries and the ability for professionals to work across borders. This fragmentation stifles growth, leading to what former Italian Prime Minister Enrico Letta refers to as a “stunning size deficit” for EU companies in comparison to their global competitors. Letta emphasizes that the time for reform is overdue, highlighting that recent pressures from the U.S. have pressed the EU to prioritize changes.
The European Commission is focusing on removing the most detrimental barriers, particularly in professional qualifications and labeling. As discussions around a unified capital market continue, it is crucial for EU members to harmonize their approaches, ensuring that the single market does not remain stalled in light of geopolitical challenges. Letta believes that momentum for reform, driven partly by external pressures, offers a path forward for the EU to enhance its economic competitiveness.