Reciprocal tariffs
“Through a highly simplistic calculation that lacks economic rigour, the US government has introduced so-called "reciprocal" tariffs for most of its trading partners. These measures focused on goods (not services), aimed at shielding American industries, immediately sent shockwaves through global financial markets. While the administration claims this move is intended to create a more level playing field, these tariffs rank among the highest seen in decades, reminiscent of the infamous Smoot-Hawley Tariff Act of 1930. That legislation exacerbated the Great Depression by igniting a series of retaliatory trade wars, raising concerns that history may repeat itself.
All countries now face a minimum 10 percent tariff on goods exported to the US, but some regions are hit harder, with China now facing a 54 percent tariff and the European Union 20 percent. The tariffs are set to take effect on April 9. While the EU is still deliberating its response, China has already retaliated with 34 percent tariffs on US goods and export bans on rare earth minerals. With each countermeasure, the risk of a full-blown global trade war increases.
For both the global economy and the EU, these tariffs and possible retaliation pose a serious challenge to overall wellbeing, as it will severely hamper economic growth, which in our growth-dependent system will mostly be felt by the most vulnerable. Although it in some cases may be legitimate to try to halt overconsumption of certain unsustainable products, universal tariffs are never a good idea. At least in theory, free trade could (and partly has) serve(d) as a tool to better distribute global wealth. In any case, given the current situation it would be wise for the EU to double down on two critical priorities: accelerating the sustainable transition and strengthening international cooperation.
Reinforcing the sustainability transition
Trump’s tariffs risk making global supply chains more volatile and increasing costs for European companies reliant on the US market. Europe is especially vulnerable regarding energy and metals and minerals, as already concluded by the Draghi report last year. With a very positive interpretation, this disruption could be seen as an opportunity rather than a setback. By investing more aggressively in renewable energy, circular economy, and sustainable manufacturing, the EU can reduce its dependency on volatile trade dynamics while enhancing its global leadership in green technology. This would for instance limit the EU’s dependency on US liquefied gas (LNG) or rare earth metals from China.
The European Green Deal and the Clean Industrial Deal already provide a framework for reducing reliance on fossil fuels and increasing industrial resilience. However, Trump’s protectionism underscores the urgency of this transition. If access to US markets becomes more uncertain, the EU must cultivate stronger intra-European supply chains and invest in sustainable production methods that lower costs in the long run. That said, the EU cannot become entirely self-sufficient, especially when it comes to critical resources such as rare earth minerals and certain raw materials needed for green technologies. This reality makes international cooperation in a more turbulent geopolitical environment all the more crucial.
Strengthening global alliances
Trump’s "America First" policies may deepen US trade tensions not just with the EU but also with other major economies, especially with China. In response, the EU has a strategic opportunity to reinforce bilateral alliances with other trading partners, including Canada, Japan, and emerging markets in Africa and Asia. Expanding trade agreements and investment in these regions can help mitigate the risks posed by US protectionism while securing stable access to essential resources. It will also help to alleviate the impact of the US tariffs for these regions.
Moreover, a stronger commitment to multilateral institutions like the World Trade Organization (WTO) and climate agreements is crucial. If the US retreats from global cooperation, the EU must fill the leadership vacuum, pushing for fair trade policies and ambitious climate commitments that align economic development with environmental responsibility. Ensuring stable and diversified supply chains through global partnerships will be essential in making the green transition both feasible and resilient.
Beyond trade and sustainability, international cooperation remains vital for maintaining geopolitical stability and preventing conflicts. The EU must recognise that economic disruptions, climate crises, and geopolitical tensions are interconnected, forming a polycrisis that demands coordinated global solutions. Protectionist measures, if left unchecked, can escalate into broader conflicts, while strategic alliances and cooperative frameworks can help prevent economic tensions from turning into military confrontations.
Sustainability transitions more urgent than ever
Trump’s tariffs should serve as a wake-up call for the EU. Protectionist measures threaten economic stability, but they also highlight the need for a more strategically independent and sustainable European economy. However, complete self-sufficiency is unrealistic—securing essential materials and trade relationships remains vital. Furthermore, international cooperation is not just about trade; it is essential for addressing the polycrisis of economic instability, climate change, and geopolitical tensions. By accelerating its green transition and deepening international partnerships, the EU can not only counterbalance the impact of US policies but also emerge as a stronger and more resilient global leader. The future demands bold action, and the EU must be ready to take it.”