Ask and you shall receive.
That’s the approach the European Union is taking as it carefully navigates trade negotiations with the United States, hoping to avert a trade war that could cost the bloc billions of euros and further complicate a cost-of-living crisis already fueling deep fractures.
Barely a month after returning to office for a second term, President Donald Trump has stayed true to his campaign rhetoric, threatening hefty tariffs on European steel and aluminum. More recently, he’s warned that fresh tariffs on cars, semiconductors, and pharmaceuticals were also on the table.
“We have made a decision and we’ll be announcing it very soon. It’ll be 25% generally speaking, and that will be on cars and all other things,” Trump said Wednesday on his plans for taxing EU goods.
So far, the EU’s strategy has been one of de-escalation at all costs — quickly suggesting it would buy more American-made goods in a bid to appease the whims of the mercurial US leader and leaving a “firm and immediate'' response as a last-resort option. But rather than a display of weakness, EU analysts and experts widely argue it may be Europe’s best bet to sidestep a trade clash at a relatively low cost.
“It seems sensible for Europe to offer up the things that are not very costly,” Zach Meyers, assistant director at the Centre for European Reform, told The Parliament. With Europe’s imports of US gas and arms imports already on the rise, the EU is in a sense “making a virtue out of a necessity,” he added.
Trump’s willingness to back down on tariffs he had threatened against Canada and Mexico last month after limited concessions from both neighbouring countries suggests Europe’s strategy could bear fruit. And if the EU were to threaten harsher retaliatory measures, the path to implementation would likely be complicated by the bloc’s byzantine decision-making process, which requires broad consensus among its 27 member states.
“I am not sure that it’s wise to be issuing threats about what the EU is going to do before there’s confidence that the EU can carry through with it,” Meyers said.
Ready to buy, buy, buy
The president, who has received millions of dollars in support from oil-and-gas tycoons under the motto of "drill, baby, drill," has made it clear what he wants from the EU when it comes to energy. "The one thing they can do quickly is buy our oil and gas," he said of Europeans following his inauguration in January.
Even before Trump was sworn in, European Commission President Ursula von der Leyen had pitched buying more US fuel as a relatively painless compromise. The US is already Europe’s top supplier, accounting for nearly half the EU’s LNG, according to Eurostat data. The move also aligns with Brussels’ decision to phase out LNG imports from Russia.
But buying more LNG from the US to balance the trade gap could prove “more complex than it sounds,” according to Columbia University’s Center on Global Energy Policy. Uncompetitive prices, insufficient infrastructure and a slump in the bloc's overall LNG consumption make it difficult for the EU to significantly ramp imports.
Another bargaining chip that the European Union is willing to use is automobiles. In his call for “reciprocity,” Trump demanded that the EU lower a 10% tariff on American cars, which is four times higher than the US equivalent on cars made in the EU. In reality, the discrepancy dates back to a decades-old deal struck by the two sides that allowed for other American goods to benefit from lower levies.
Still, Maroš Šefčovič, the European Commissioner for trade and economic security, said in a recent visit to Washington that the bloc would be open to making American cars cheaper for European consumers.
A messy bargain
The elephant in the room, however, remains Europe’s security dependence on the United States. Trump has made it clear he intends to leverage the bloc’s security needs, which he has repeatedly called out as free loading.
“At a time when it seems that the transatlantic alliance is being redefined, it is certainly the case that the EU has an inherent weakness due to its lack of a military,’’ Isabelle Van Damme, a professor of international economic law and director of studies at the World Trade Institute at the University of Bern, told The Parliament.
Brussels has expressed a willingness to bolster defense spending and buy even more military systems from the US — a position strongly championed by Italy. Europe already imported 28% of overall US arms exports between 2019 and 2023, up from 11 percent in the period from 2014 through 2018, according to the Stockholm International Peace Research Institute.
Playing Whac-A-Mole
Experts worry, however, that Trump’s nature is just too unpredictable for the bloc to come up with a winning tactic.
“The real problem we face is that Trump’s chaos makes it impossible to know what he is exactly going to do,” said Joseph Dellatte, a research fellow at the Paris-based Institut Montaigne think tank.
Diplomats familiar with the EU negotiations told The Parliament that the biggest mistake the bloc could make would be to “overreact.” One diplomat, speaking on the condition of anonymity, added: “The worst-case scenario would be waking up to a new announcement in the morning and reacting by the same evening. We can’t become a puppet responding to Washington.”
Van Damme acknowledged that, regardless of how Brussels ultimately responds on trade, current circumstances give little hope for a favourable outcome. “The new US administration’s approach to trade is, this time around, more principled and it might become harder for the US’ main trading partners to secure wins," she explained.
What the EU can do
But if the EU’s efforts at compromise fall short, Brussels may still have more instruments up its sleeve to respond than its initial low-profile stance suggests.
First, a package of counter tariffs targeting Harley Davidson motorcycles and Levi jeans — originally agreed upon in response to Trump’s 2018 steel and aluminum tariffs — could take effect as early as March, having only been suspended under a previous US-EU agreement to avert a trade war in the president’s first term.
But this would be just the opening salvo. The EU’s secret weapon is its strengthened trade defense mechanisms. An updated enforcement regulation mechanism would allow the bloc to strike back whenever trade partners block dispute resolutions at the World Trade Organization or breach agreements. The Anti-Coercion Instrument is an even more powerful tool, designed to retaliate against full-fledged economic blackmail on a European country – including by restricting access to the single market in public procurement tenders.
But pulling the trigger requires a qualified majority — equivalent to 15 nations out of 27 representing 65% of the population — that could prove difficult in a deeply divided EU.
Brussels could also leverage the same regulatory architecture it is now trying to simplify. That would come in the form of tougher rules against US tech firms, such as Meta, Google, and X, which could be hit by a tax increase and a cap on sharing European users' data. With a trade deficit in services estimated at €109 billion in 2023, such measures could inflict severe damage on American companies. The Trump administration has already voiced consternation over EU tech regulation, calling it “overseas extortion.”
To observers like Meyers, the risk is that, even with the right cards at its disposal, Europe may not be able to respond quickly enough.
“If the easy stuff doesn't work,” he said, referring to the bargaining chips so far floated by the EU, “leaders need to be thinking: How can Europe move quickly?”
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