EU Response to U.S. Tariff Threats

In May, President Trump declared an intention to increase tariffs on European autos from 15% to 25%. The tariffs were postponed, with a new deadline set for July 4. The European Union (EU) could have chosen to retaliate but showed restraint. Instead, they opted to implement a trade agreement with the United States in June. Although this new agreement is not ideal, the EU’s response was measured and responsible amidst unwarranted provocation.

Public office often teaches that preventing negative outcomes does not yield appreciation. Voters typically favor visible, positive results over unseen damage control efforts. This applies to the current tumult in world trade. By exercising restraint with U.S. trade, European nations engage in damage control. Few credit the farsightedness of other nations’ leaders who, despite pressure, have resisted mirroring U.S. tariffs with their protectionist measures.

U.S. trading partners, with some exceptions, have not reciprocated Trump’s unilateral and illegal tariffs by imposing protectionist tariffs on American goods. Instead, they have largely maintained their stance, refraining from myopic counteractions. Some nations may avoid tit-for-tat responses due to Trump’s intimidation. While bullying can succeed temporarily, avoidance of retaliation stems from more than fear of U.S. economic coercion.

Trump’s tariffs are unilateral actions. Under his leadership, the U.S. has abandoned its support for multilateralism as a key member of the World Trade Organization (WTO). Other WTO members, like the EU, remain committed to the rule-based multilateral system, promoting collective international cooperation. Lowering trade barriers, rather than raising them, is key to achieving global prosperity, as understood by WTO members.

Trump’s tariffs breach international law, disregarding the WTO’s principle of non-discrimination and most-favored-nation treatment. The Trump administration is attempting to remove this obligation from the WTO agreement. Nevertheless, other WTO members recognize that world trade thrives under the non-discrimination principle and the rule of law, rather than capricious decisions on social media.

The non-discrimination principle dates back to the Hanseatic League’s Baltic trade over 800 years ago, and its economic logic persists. Upholding trade law remains crucial. Apart from legal reasons, countries refrain from retaliation against Trump’s trade actions because they have alternative trading options outside the U.S.

The U.S. contributes only about 10% of world exports and 13–15% of world trade, giving other countries the flexibility to shift trade activities to other regions. They import from alternative sources and export to new markets, realigning supply chains and bypassing the U.S. This strategic reorientation benefits these countries more than a trade war would, inadvertently limiting U.S. trade opportunities that could boost American prosperity.

James Bacchus is an adjunct scholar with the Cato Institute and a global affairs professor at the University of Central Florida. He is a former U.S. Congressman and a founding member and former chairman of the WTO Appellate Body. His latest book is “Democracy for a Sustainable World: The Path from the Pnyx,” published by Cambridge University Press.

Copyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.