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After two weeks of chaos, the tariff policy of the United States under President Donald Trump appears to be converging around three elements: 1) a baseline import surcharge of 10%, with the main purpose of raising revenue; 2) protective tariffs of 25% on steel, aluminium, cars and car parts, which are likely to be extended to pharmaceuticals and semiconductors; 3) special treatment for China, although it is unclear whether the US will maintain its current prohibitive tariffs (at time of writing) or will start bilateral negotiations on the basis of the pre-April tariff levels.

In this context, the European Union should develop a strategic response that reinforces EU leadership in support of a reformed rules-based trading system. This should combine the following elements:

Bilateral negotiations: while being ready to engage in bilateral negotiations, it is essential for the EU to avoid commitments that contradict World Trade Organisation rules. The EU has , but it appears unlikely that the US will eliminate its baseline or protective tariffs. In any case, unilateral reductions of EU tariffs would be impossible to justify when US average tariffs are 15.5% and EU average tariffs are 1.35%.

There may be scope for increased EU purchases of US liquified natural gas or military equipment, although any such commitment should be framed in a manner that still enables Europe to develop greater strategic autonomy in critical defence capabilities and that avoids excessive reliance on the US as an energy supplier. 

Retaliation threat: any bilateral negotiation must be backed up by a credible retaliation threat. The EU’s steel and aluminium retaliation will  unless a bilateral agreement has been reached. This paused retaliation, however, is not a sufficient deterrent and should be complemented by the preparation of additional retaliation, which could include restrictions on services and procurement.

China: there are calls for the US to agree with allies on  against China, but alignment with a US-led policy of decoupling from China would be highly damaging in economic terms and not in the EU’s interest.

Instead, the EU could signal to the US its readiness to cooperate in putting pressure on China to move its economy towards consumption-led growth and to reduce structural overcapacity, while making government support transparent. The EU should in any event be ready to take WTO-consistent measures to protect its market against trade diversion arising from the US-China trade war (though such risks should not be exaggerated, since exports to the US of products for which China has overcapacity were already limited).

An EU-CPTPP alliance: reform of the rule-based trading system requires a robust alliance of countries that are ready to work in the interests of the system. Unfortunately, too much of the focus so far has been on bilateral negotiations with the US. Trade ministers from the EU and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries should coordinate urgently on three points:

1. A position on the response to US tariffs and the risks linked to Chinese overcapacity;

2. A common strategy for the next  in Cameroon in March 2026;

3. Establishment of a reflection group to make proposals on how the EU and the CPTPP could reinforce cooperation. This could include digital trade, promotion of resilient and sustainable value chains and possibly a common protocol on rules of origin.

Trade ministers could also propose a standstill commitment preventing new trade barriers, which could then be discussed with other WTO members in the lead up to the November 2025 G20 summit in South Africa.

WTO reform: in the short term, the prospects of substantial WTO reform are limited because it would require the willingness of both the US and China to engage in good-faith negotiations on critical trade issues in a multilateral forum. The short-term objective should be to keep the WTO relevant by reaching agreements on some development-related issues and by preparing the ground for broader future negotiations.

The EU should prioritise engagement with India, Brazil and South Africa to identify a balanced package for the March 2026 WTO Ministerial and work with CPTPP countries on reform proposals that deal with issues including dispute settlement, modernising subsidy rules and achieving a new balance on market-access commitments.