Brussels, 9 December 2024
Policy brief by Ignacio García Bercero, Petros C. Mavroidis and André Sapir
Executive Summary
President-elect Trump has threatened to increase United States tariffs to 60 percent on imports from China and 10 percent to 20 percent on imports from other trading partners, including the European Union. In doing so the US would be ignoring its World Trade Organisation commitments and would also rollback the substantial liberalisation that has taken place during the past 80 years, with a potentially major negative impact on the world economy.
In response to this threat, the EU should pursue a three-pronged strategy.
First, the EU should engage bilaterally with the US to seek to avoid the imposition of tariffs. This could include an offer to consider measures on facilitation of bilateral trade and on economic security cooperation, while making clear that any trade measures adopted by the EU will be consistent with WTO rules. This offer should be backed up with a credible threat of retaliation that could be implemented if the US decides to impose tariffs on EU exports. Retaliation could take the form of a negative list – the EU would increase its tariffs on all US exports to the same level as the US tariffs, except for products imported from the US identified as crucial for the EU.
Second, the EU should act to preserve a functioning rules-based multilateral trading system, including on dispute settlement, and should continue to pursue WTO reform. To this end, the EU should build a coalition of countries including key players from the Global North and the Global South ready to lead in this endeavour.
Third, the EU should expand its network of bilateral and regional preferential trade agreements. The priority should be the ratification of the agreement with Mercosur, but the EU should also aim to improve trade relations with the United Kingdom and Switzerland and to further strengthen partnerships in the Indo-Pacific region, and with Africa.
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Source – Bruegel: Read the Policy Brief online