The Europeans deal “wisely” with American tariffs

When US President Donald Trump threatened in May to raise customs duties on European cars from 15 to 25%, he postponed implementing this and gave Europe until July 4, 2026.

The European Union could have responded, but the Europeans, in a gesture of restraint, refrained from escalating the situation. Instead, in June 2026, they decided to implement a trade agreement with the United States, through their own consultative institutions.

Although this new trade agreement between the United States and the European Union is far from ideal, it was a reasonable and responsible step by the European Union in the face of “unwarranted provocation.”

Damage reduction

One of the hardest lessons to learn from holding public office is to realize that there will be no expression of gratitude to prevent the worst, as voters value the positive outcomes they can see and touch. As for harm reduction, they do not attach great importance to it, and this is the case now with the current chaos in global trade. By committing to restraint in their trade with the United States, the Europeans are engaging in harm reduction.

Until now, few have given credit for their foresight to leaders of other countries who, despite enormous pressure, have refrained from responding to repeated US tariff attacks with protectionist countermeasures of their own.

Despite facing a seemingly endless stream of unilateral and illegal US tariffs, US trading partners, with very few exceptions, have not responded with a short-sighted response by imposing similar unilateral and illegal tariffs on their imports of US goods. Instead, most have ignored these trade-threatening US measures.

It is certain that some US trading partners may have refrained from reciprocating, due to intimidation practiced by the White House administration. However, the general lack of retaliation has much more to do than fear of further American economic coercion.

Maintain gains

Trump’s tariffs are unilateral, unilateral actions by the United States. Under Trump, the United States has clearly abandoned its long-standing, bipartisan commitment to collective action in multilateralism as a founding and leading member of the World Trade Organization, but other members of the World Trade Organization have not. An important reason why most of them do not respond is that they insist on trying to preserve the global gains hard-won over decades of the rules-based multilateral system overseen by the World Trade Organization, so they prefer not to take unilateral action outside that system. This applies, for example, to the European Union.

Unlike Trump and his trade team, other members of the WTO continue to recognize that the path to greater prosperity for all 166 countries in the global trading system lies in lowering, not raising, trade barriers, and that shared global prosperity can only be achieved when the aggregate economic gains from trade are maximized through collective international cooperation within the framework of a multilateral system, supported, strengthened and in which all trading nations fully participate.

Another reason why other countries generally do not respond with retaliatory tariffs is that Trump’s tariffs are illegal under international law.

Trade discrimination

Under the current administration, the United States has abandoned the WTO’s core principle of non-discrimination in trade—the commitment to “most favored nation” treatment for imports of all like-for-like products wherever they originate—in favor of a policy of “trade discrimination,” and the White House is even trying to erase the general commitment to non-discrimination in trade from the WTO agreement.

However, despite the United States’ abandonment of a long-stated fundamental trade principle by Americans of both major political parties, other members of the WTO continue to recognize that global trade contributes much better to promoting global prosperity, when it is based on non-discrimination and other agreed principles set forth in the WTO agreement, and when it is maintained within the framework of the international rule of law, than when it is subject to a president’s midnight tweets on social media.

The principle of “non-discrimination in trade” can be traced back 800 years to the Trans-Baltic Trade and the Hanseatic League, and its basic logic remains unchanged and cannot be questioned economically regardless of the current geopolitical path, as is the logic of adhering to the rule of law in trade.

Besides these reasons why other countries have largely refrained from responding to US President Donald Trump’s trade practices, we must add the practical reality that they have other trade options than the United States. Given that the United States’ share represents only about 10% of global exports, and about 13 to 15% of global trade, these other countries, rather than bothering to respond to US tariffs by imposing their own tariffs, can simply direct their trade elsewhere in the world, which is exactly what many of them are doing. About “The Hill”