Agathe Demarais is a senior policy fellow at the European Council on Foreign Relations.
U.S. president Donald Trump woke up in a bad mood on Friday. In the early hours of the day, he lashed out against Apple, and then threatened to impose a 50 percent tariff on American imports from the EU in July.
The consensus in Europe is that Brussels now only has two choices: Negotiate a trade deal with Washington, or retaliate against the U.S.
However, this overlooks a third — and probably better — option: shrugging off Trump’s threats.
Truth is, there are a whole host of flaws to both the negotiation and retaliation strategies. When it comes to negotiating, for example, the EU would need to know U.S. demands in order to ink a deal. But this a problem because no one has a clue what Trump really wants from Europe. Current hypotheses include a revamp of VAT systems, EU pledges to import more U.S. LNG or defense kit, and promises to decouple from China — though it may well be something else entirely.
This lack of clarity around Washington’s asks points to another obvious issue with negotiating as well: Trump seems to enjoy bullying both allies and foes alike. This means, there’s every reason to believe that if the U.S. and the EU were sign a deal, he could walk away from it at any time to ask for more. And if the bloc can’t even guarantee Trump will leave Europeans in peace afterward, it’s unclear why it should bother negotiating with him in the first place.
The retaliation scenario isn’t any more promising. U.S. firms and consumers will bear the brunt of Trump’s tariffs, which are a tax on U.S. imports. So, other than political posturing, it’s hard to understand why Europeans would want to add insult to injury and penalize their own economies with retaliatory tariffs against the U.S.
If Trump wants to harm the U.S. economy, so be it. The EU doesn’t need to follow suit.
Besides, EU capitals would probably struggle to agree on a retaliation package, which would fuel the risk of EU fragmentation. EU countries that source a huge share of their imports from the U.S. — Belgium, France, Ireland and the Netherlands come to mind — would worry that the bloc’s retaliatory tariffs could fuel inflation. Meanwhile, countries with a huge number of firms that rely on the U.S. as a key export market, like Germany and Italy, would fear triggering an unpredictable escalation in the trade war.
The likelihood of such restraint in some European capitals also highlights that the EU currently has no idea what might follow a potential retaliatory salvo. If Trump really believes that “tariff” is the most beautiful word in the dictionary, and that trade wars are easy to win, he could well choose to raise tariffs against the EU even further if the bloc were to escalate. After all, it was just a few weeks ago that Chinese firms faced the mystifying possibility of a 145 percent tariff on their exports to the U.S.
Speaking of China, insights from Beijing’s recent dealings with Trump do help underscore why ignoring the U.S. president’s blackmail may be the better option.
Amid the uncertainty regarding virtually everything that has to do with U.S. trade policy these days, one of the few hard facts is that Trump often blinks first: He postponed the implementation of his worldwide “reciprocal tariffs” just a few days after announcing them in early April; and he was the one who backed down first in confrontation with Beijing, agreeing to a trade truce in mid-May.
No one knows for certain why Trump caved, but it would be a solid bet that intense lobbying from private firms and the chaos on U.S. financial markets helped convince him to cut his losses. A similar scenario could unfold if he makes good on his tariff threats against the EU. The bloc is by far the largest source of U.S. imports, supplying $606 billion worth of goods to American firms and consumers in 2024 — that’s nearly one-third more than China.
Simply put, the EU has no good option if it wants to react to Trump’s tariff threats. In turn, shrugging them off could be the best move. As an added benefit, such a decision from the bloc could inspire other economies to do the same. With three-and-a-half more years of Trump 2.0 to go, setting such a precedent may not be an entirely bad idea.
Not all provocations require a reaction — and sometimes showing courage entails doing nothing.
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