Note that those tariffs are related to earlier US tariffs from March, not the recent universal tariffs.
The European MO in that respect is very consistent : take time to deliberate, reach consensus and apply pressure in kind. It's at odds with the news cycle but I prefer that over instant gratification.
As an European citizen I fear that our policians still thing the US can be reasoned with. I’m sure some scenario was worked out that assumes it cannot be reasoned with, but I just would like to know that.
Notably, the EU proposed a zero-tariffs free-trade agreement to the US in February, and again a few days ago after the reciprocal-tariffs announcement. Trump rejected the proposal, presumably because it wouldn’t remove the US trade deficit.
He said he wants the EU to pay €350 billion a year and to "pay for the past"—and I assume he'll feel emboldened to make even more demands and weaken the EU economy further. And all of that for "security" that's now pivoting to Asia? That sounds like a terrible deal for the EU.
The EU spent €326 billion on its military in 2024. Add €350 billion to that, and you're looking at real-value spending higher than the U.S. military budget. On top of that, if that money is spent within the EU, you get economic growth plus full independence from the U.S.
Trump is overplaying his hand with both the EU and China—especially with China, where some minerals essential to modern manufacturing are mined and processed almost entirely there (90%+ in some cases). You can't do cost-effective manufacturing in many industries without China—at least not for many years to come.
Brussels is watching amazed, as Trump destroys the US economy. "Nobody in the Commission thought that the US government would be this stupid and self-destructive," an EU official tells me. "That they would blow up their own country by letting ChatGPT make their trade policy."
EU officials are quietly preparing brutal countermeasures — but they’re in no rush.
Markets are doing the work for them. Here’s what’s happening behind the scenes:
Trump’s chaos is collapsing the US markets faster than any EU retaliation could.
Inside the Commission and among EU governments, the mood is: Don't give Trump an excuse to blame this on others.
Since February, the S&P 500 has dropped 20%.
European officials believe Trump's trade chaos is backfiring — and see no reason to escalate while the damage grows organically.
Inside the Commission and among EU trade ministers, the mood is calm — almost mocking.
“We’ll just let them stew,” another senior official says.
“If Trump doesn’t blink by the end of the month, we’re ready to hit hard.” But for now? They'll watch him sweat.
German Economy Minister Robert Habeck summed up the mood: “We're under no time pressure. The Americans are under pressure and are now in a position of weakness,” he said. “The damage can get even worse — that’s why we must act calmly, carefully, but decisively.”
Habeck also mocked Elon Musk’s call for a US-EU "zero-tariff" deal:
“It's sign of weakness and fear. If he has something to say, he should go to his President... Before we talk about zero tariffs, stop the nonsense and mess you just made in the last week.”
As a European I have a rough understanding about the legal grounds of how tariff rules are being set in the EU.
But on the US side - can a US citizen maybe explain the legal basis of the current tectonic shift in trade policy enacted through the tariffs? So far I assumed that the federal executive branch could only use tariffs to address security concerns or unfair practices. The actual policy change (especially the 10% base rate) is definitely more than that.
He only has the ability to enact tariffs in an emergency, which he claims is the case, because "fentanyl", but probably will not live up to legal scrutiny.
The challenge of course, is that it takes a lot of time to legally challenge it, and in the meantime, we have this chaos.
This is why choosing a moral, steady, wise leader is important. The system can't keep up with the alternative.
The conclusion shouldn’t be about choosing a wise or moral leader, that’s an unknown and not a guarantee whether someone will remain wise.
The conclusion ought to be that the executive shouldn’t have such powers.
DOGE is also an example of this. No clue whether for the better or worse. But the mechanism being used was put in place by Obama during affordable care act overhauls, as part of USDS (US digital services).
All the analysis I've read about it say that the one-sided implementation of broad tariffs is not legal according to current US laws.
It doesn't matter though until it's litigated, goes through courts, appeals, Supreme Court, while all that process is ongoing the tariffs are there. And who the fuck knows how the Supreme Court will decide on this in the end?
There are a bunch of places in US law where congress grants the president very broad and often vague powers, if the president declares an emergency. They generally very unclear about what constitutes an emergency, deferring to the judgement of the president.
There is not a lot of case law on this, so the final outcome is unpredictable.
As with so many things here, the remedy for the executive just pulling some nonsense must be sought through the courts. That remedy is being sought, notably by affected businesses. Trump will simply argue that there is a security concern here, or something like that.
The courts, as usual, will first decide which outcome they prefer. They will then try to find some reasoning that will give them that outcome without looking too foolish. The latter step is easy in this case, but it's at least plausible that the courts don't want to crash the global economy. So it could go either way.
Regardless, this is likely to take a while. Courts are slow, especially on contentious issues.
It's also possible that the executive just tries to ignore an unfavorable ruling, as they have already done in other instances; nobody really knows what will happen in that eventuality...
tl:dr Congress has for various historical reasons decided to cede more and more power over trade regulation to the executive branch over the years, starting all the way back in the 30s. This has resulted in the president having almost unilateral leeway to decide what constitutes "security concerns or unfair practices" when it comes to trade. And until congress passes a bill to reign in that power, it is probably legal for the president to decide that almost anything is 'unfair' and that basically any response is reasonable.
What Trump's doing may be illegal, either on the basis that the law under which it is being done is itself unconstitutional (in that it delegates the power to set taxes from Congress, which isn't supposed to happen) or in that he is misusing that law (in that it is supposed to be for emergencies). Lawsuits are being taken against the state on both bases.
> France, Ireland and Italy secured the removal of Bourbon whiskey from the list of targeted products, after Trump threatened that its inclusion would trigger counter-imposition of a 200% tariff on European alcohol.
France exports EUR3.8 BILLION a year in booze to the US, Italy about EUR2 billion, and Ireland about EUR1 billion, so they are rightly worried about their industry should the US hit with a 200% tariff.
There is one front. That's does not mean that the various interests should not be taken into account.
In "normal" times this is how the US operate, too. There are various industrial regional interests that lobby the federal government, and then a decision is made.
Irish-Americans are less ambivalent about their roots than many other people of European descent - being excited about being part-German in Missouri is tantamount to being excited about watching paint dry, for example - and the fact that a man of Irish descent was President of the United States within two centuries of the "famine" and after centuries of oppression by the English boosts the credibility of America as a "land of opportunity", even if only in retrospect.
They definitely can't, given that tax decisions require unanimity. Like, if they didn't get this sorted when they had Ireland over a barrel in 2011, it's probably not going to happen. Full disclosure: I am an Irish citizen.
Still it would not be very hard for individual countries to find indirect ways to tax them individually. Like putting 50% VAT on extensive phones to target Apple, or on application stores revenue, etc.
Again no. VAT is also managed at EU level. The digital services tax could be done. The best thing would be to implement the full beps agreement but the US don't want that.
*
First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision. Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods.
Second, they can stop unfair and harmful trading practices by opening their markets and buying more from America;
Third, they can boost defense spending and procurement from the U.S., buying more U.S.-made goods, and taking strain off our servicemembers and creating jobs here;
Fourth, they can invest in and install factories in America. They won’t face tariffs if they make their stuff in this country;
Fifth, they could simply write checks to Treasury that help us finance global public goods.
*
This is all extremely vague, and Japan and Korea have absolutely not "caved in" on this basis. Japan and Korea talking to the US; the EU did too, and Trump refused their zero-for-zero offer. But if those talks come to nothing, which seems likely, then Japan and Korea will absolutely introduce retaliatory tariffs, too; the game theory of the thing makes it more or less inevitable.
Neither South Korea nor Japan are retliating and they sent delegation to "negotiate", which in context means to see what concessions they can offer to try to remove or lower the new tariffs.
That's pretty much "caving in", but that's also expect: Both countries are not strong enough and too dependent on the US to do otherwise.
The EU is not yet retaliating (the tariffs mentioned in the article are retaliation for the US's steel and aluminium tariffs from last month, not the most recent batch), and is negotiating; as I mention there was a zero-for-zero option. Retaliation for the current round of tariffs is currently under discussion.
Make no mistake, it'll be the same in Japan and SK. At least the credible threat of retaliation, if not retaliation already in action (the China approach) is required for any real negotiation.
This is related to _last_ month's tariffs on aluminium and steel. The EU tends to be measured on this sort of thing.
The EU did offer Trump zero-for-zero as a result of the _current_ tariffs; he wasn't interested (which isn't particularly surprising, given that he seems to want trade deficits to magically go away).
The EU has absolutely no reason to cave in. Its just not striking back like China is, rather being content and surprised watching the US commit economic suicide.
Tit-for-tat is a pretty well known winning strategy in game theory for conflict resolution, it's very predictable: if you cooperate, I will cooperate, if you want to compete, I will compete.
It gives a quite transparent off-ramp: if you start to cooperate, I will cooperate.
There's no point in not playing tit-for-tat in this situation, not retaliating is a losing strategy.
Then we are out of any rationality, ending with both parties losing. In that case I'd guess that a player trying to win against every single other at the same time will be the ultimate loser.
from the point of maximising value in the economy its a game where in a single iteration co-operate is strictly better than any alternative. if the other player co-operates then that is the best outcome. if the other player defects then you are still better off co-operating than defecting.
but the problem is the real game being played is different because the political process ends up diverging from maximising value in the economy. the free trade argument is this is because the political process is captured by concentrated interests who benefit from tariffs to reduce competition. the deadweight loss caused by tariffs to the rest of society is not properly accounted for in the political process because the cost is diffused over many people. other people who accept the text book comparative advantage argument but reject free trade will claim to have a different optimisation function that is not purely maximising value in the economy. for example maybe they think its important to have a strong manufacturing base in order to make it easier to re-arm to fight a conflict.
but if we accept this situation then its difficult to say what the optimal strategy is because you don't really know the payoff matrices for the players. even what they tell you could be a lie and might be difficult to derive what their values are based on their actions.
Make things painful enough that one of the players decides to change their strategy (e.g, by changing who has been delegated decision-making authority. Hopefully.)
You also have to consider the longevity of your strategy. Trump might not care about the value function, but over the longer term the EU could make a bet that the US does and will, one way or another, return to leadership that does. And indeed, they seem to craft tariffs to cause that to happen faster.
I haven't been familiar with trade wars before Trump. What I don't understand is what there is to win for the EU by suddenly imposing its own tariffs... that will slow down its own economy, even possibly cause social unrest. If US wants to do tariffs, fine, but there is no need to compound on the damage.
The point is to inflict pain on the aggressor; in general no-one ‘wins’ a trade war, and the goal is to make things bad enough for the aggressor that they back down.
In this case, the aggressor inflicted much pain on _itself_, before the tariffs really even went into operation, that it has already partially backed down, but that’s kind of unusual that it would happen so quickly.
The European MO in that respect is very consistent : take time to deliberate, reach consensus and apply pressure in kind. It's at odds with the news cycle but I prefer that over instant gratification.