As the US announced universal tariffs on global imports Wednesday, the European Union — one of the hardest-hit trading partners — held off on immediate retaliation. Instead, the 27-member bloc is biding its time before responding to President Donald Trump’s “unjustified” tariffs, attempting to align on a response that would strike back without inflicting unnecessary self-harm.
The EU’s cautious approach was captured by Maroš Šefčovič, the European Commission’s chief trade negotiator, who is in Washington Friday to meet with his US counterpart. “We'll act in a calm, carefully phased, unified way as we calibrate our response, while allowing adequate time for talks. But we won't stand idly by should we be unable to reach a fair deal,” he wrote on X on Thursday.
The “carefully phased” response is meant to ensure that the EU has all members on board to give it a credible negotiating stance with the US, experts say.
“Part of the EU strength in trade policy is derived from the unanimity, or at least consensus, among the 27 member states,” David Henig, a trade expert at the Centre for International Political Economy, told The Parliament. “It doesn’t necessarily come easily or quickly, but it represents a tremendous negotiating strength,” he added.
After months of uncertainty and failed attempts to bring Washington to the negotiating table, the US on Wednesday night announced an extra “reciprocal” 20% tariff on EU goods — twice the rate imposed on most other countries but still lower than the 34% slapped on China. That comes on top of a 25% tariff on EU cars and 25% on steel and aluminum imposed by the US administration earlier this year.
“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” Trump said at the White House Wednesday. “Now we’re going to charge the European Union.”
Trump insists the levies will balance out unfair trade deficits and unleash a wave of new manufacturing jobs in the US. But the move marks a new low in the already strained transatlantic relationship, with Trump repeatedly accusing “pathetic” Europeans of “freeloading” and being united to “screw” the US.
In 2023, the EU recorded a trade surplus of €157 billion with the US. However, it faced an overall trade deficit in services amounting to €109 billion, according to the Commission.
Out with appeasement, in with retaliation
When it comes to Trump, the EU has largely adopted a strategy of appeasement — offering Washington concessions like purchasing more gas and weapons, and even lowering car tariffs. Underpinning these efforts was the belief that the US administration would ultimately seek to avert a deepening trade conflict with its largest trading partner.
Now, the EU is scrambling to finalise a batch of countermeasures designed to inflict significant pain on the US without disproportionately damaging European industries. “Europe has everything it needs to make it through the storm,” said Commission President Ursula von der Leyen in a statement Thursday.
The new package is set to include retaliatory levies on US products that can be easily replaced, such as alcoholic drinks and soybeans, alongside tougher rules for US tech firms like Google and Meta. The latter could deal a particularly significant blow to Big Tech, given the US trade surplus in services with the EU.
Amid escalating hostilities with Silicon Valley, the EU’s executive had also been expected this week to fine Google and Apple on grounds they breached the EU’s digital competition rules under the Digital Markets Act.
Moreover, Europe has leverage when it comes to investment. EU nations accounted for 45% of all foreign direct investment in the US in 2023, according to the US Bureau of Economic Analysis. Responding to Trump’s tariff announcement, French President Emmanuel Macron on Thursday urged European businesses to hold off from making new investments in the US until the landscape becomes clearer.
“Trump thinks he runs the show when, actually, he doesn't,” said Maria Demertzis, an economist at the Conference Board Europe, a business association, suggesting he’ll soon find himself engulfed in a raft of retaliatory actions from US trading partners.
EU member states are expected to approve the countermeasures as early as next week, according to a senior EU official who spoke to reporters on Thursday. The measures could take effect by late April.
One of the most pressing questions, however, remains whether Brussels will resort to using its beefed-up trade defense toolbox, particularly its anti-coercion instrument. The tool, the strongest in the EU’s trade defence arsenal, was originally designed to retaliate against economic blackmail on a European country, including by limiting access to the single market in public procurement tenders.
To experts like Demertzis, several actions by the Commission — including the repeated use of the word “unlawful” when referencing US tariffs to the decision to bar American companies from a new joint weapons procurement process — suggests the EU’s executive is already laying out the groundwork for triggering the mechanism.
Trade strategies
There is broad consensus that the success of Europe’s response hinges on the 27 member states staying united and resisting the temptation to seek bilateral exemptions from Trump’s sweeping tariffs. In his remarks this week, Trump said he expected “foreign presidents, prime ministers, kings, queens, ambassadors” to “soon be calling to ask for exemptions from these tariffs.”
On the EU front, the sole negotiator will remain the Commission, which is legally bound to defend the bloc’s interests regarding trade. Yet fears persist that some EU nations could try to leverage their personal relationships with Trump to seek favourable treatment by the US. Among those who could break EU ranks are Hungarian Prime Minister Viktor Orbán and Italian Prime Minister Giorgia Meloni — two of Trump’s closest allies in Europe.
“Yesterday’s tariffs move by the US made one thing clear: the European Commission should have negotiated. They had two and a half months. They did nothing,” lamented Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó, on X.
But Italy’s Meloni, who just days earlier had refused to take sides between the EU and the US, strongly condemned Trump’s decision to impose tariffs on the bloc, calling it “wrong” and “not in the interests of either party.”
According to trade expert Henig, the chances of EU nations defecting from a united front remain slim. “He doesn’t offer much” to incentivise countries to do so, he said of Trump.
Next world trade leader wanted
With tariffs now at levels not seen since the 1930s, many observers have characterised Trump’s move as a full-blown return to US protectionism and his self-proclaimed ‘Liberation Day’ the start of a new era.
“Imposing a blanket 10% tariff on global imports – and 20% on EU goods – is not a defence of fair trade, but a departure from the very principles that have underpinned global economic cooperation for decades,” David McAllister, the chair of the European Parliament’s Committee on Foreign Affairs, told The Parliament via email. “What’s at stake here is not just trade – it’s the future of international free trade,” he warned.
Still, some European experts argue that Trump's tariffs don’t have to dictate the EU’s economic future. Instead, Europe could counterbalance more protectionism by deepening trade ties elsewhere. Aware of the looming threat, the European Commission has in recent months sought to strengthen economic ties with the Mercosur bloc in Latin America, Switzerland and India.
Henig suggested that, despite the uncontestable economic blow, the new tariffs should be seen as the “US departing the world trade system for a while,” rather than the end of the world trade system. But, he cautioned, “that requires someone to step up to take up the leadership — and that someone is most obviously the EU.”
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