When U.S. President Donald Trump unleashed a wave of tariffs in April, the move was widely dismissed as political overreach. It drew outrage from allies, dented his domestic standing, and spurred financial markets into disarray, forcing a pause just days later.
The episode seemed to embody America’s recurring impulse to reshape global norms. But three months on, Europe is exhibiting its own familiar pattern: fragmentation.
With the deadline for a negotiated compromise drawing closer, the European Union's response appears increasingly fractured. Instead of securing a full rollback of the tariffs — including a likely 10% base levy — the bloc faces the prospect of an “asymmetric” deal.
The United Kingdom’s pared-down agreement with Washington has become an unfortunate precedent.
That deal left existing tariffs on British steel and aluminium intact, but offered token exemptions and a favourable post on social media — a model Canada has now followed, scrapping its digital services tax under U.S. pressure tactics.
Markets, meanwhile, all of this happening, are answering positively to signs of a potential de-escalation. Yet, the lingering question is whether — or how — the EU will retaliate.
The economic impact of the duties is substantial, hitting exports worth over $600 billion, from Airbus aircraft to Volkswagen vehicles. Inaction could signal that Trump’s hardline tactics are effective.
NATO members recently agreed to raise defence spending targets to 5% of GDP — including a significant 1.5% allocated to infrastructure — in a move seen as appeasing a longstanding Trump demand while funnelling more orders to American defence firms.
G7 nations have similarly made concessions, such as revisiting tax policy on U.S. multinationals, to avert further retaliation. Brussels has offered a series of incentives: greater cooperation on China, increased imports from the U.S., and more defence alignment.
However, as Danish Prime Minister Mette Frederiksen warned, the EU may soon have to “respond in kind.” Effective retaliation, particularly if it extends beyond goods into services offered by firms like Amazon or Alphabet, requires unity — something that remains elusive.
Despite a firm stance from the European Commission, internal divisions persist. German Chancellor Friedrich Merz is focused on domestic reform and shows little appetite for tariff confrontations.
Italian Prime Minister Giorgia Meloni, keen to maintain her rapport with Trump — showcased during recent NATO meetings — is unlikely to push for confrontation. Eastern European nations, concerned with regional security and reliant on U.S. military support, are similarly cautious.
French President Emmanuel Macron may adopt the mantle of trade defender, but even Paris is likely to prioritise protection for national industries such as aerospace.
Spain, recently criticised by Trump, remains isolated, lacking broader European backing. While Britain once touted that “no deal is better than a bad deal,” Brussels has dropped such rhetoric as officials strive to protect regulatory standards without jeopardising ties with Washington.
Despite its challenges, the EU retains formidable trade capabilities. Partnerships with Canada and Japan show its ability to forge meaningful agreements. Yet the lesson remains clear: the bloc must confront the strategic dependencies that make it vulnerable to economic pressure.
This requires coordinated action — from consolidating Europe’s fragmented defence industry and boosting innovation, to building robust capital markets and addressing technological shortfalls. These steps are essential if the EU is to move beyond dependency and assert genuine sovereignty.
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