No countermeasures, the EU would benefit from an agreement on 10 percent tariffs

The truth, on American duties, is that the European Union would be better off doing nothing: finding an agreement to stabilize the current US tariffs at 10 percent, and not imposing countermeasures . Trump has proven himself sufficiently malleable and convincing with vague and not very binding agreements, which do not require excessive commitments. Like the one just signed within NATO to increase the military spending target to 5 percent (which in reality is 3.5 percent and will be revised in 2029, the very year in which Trump will no longer be in the White House).

This orientation appears widespread in many European capitals. In Rome and Berlin certainly, while Paris seems convinced that it can obtain more favorable conditions with a more muscular approach, responding with counter-duties on goods made in the USA. But Italy and Germany know well how much they would risk in the event of an open trade war: today they are among the most affected economies, with average tariffs of 5 and 6 percent respectively . France, on the other hand, has less exposure to American duties, and in April suffered average customs duties of 3 percent.

Until two months ago, the French position was dominant even in Brussels: respond blow for blow, without retreating. Only in this way would Trump be convinced to negotiate with the European Union, it was thought: to be respected, by showing that they were as tough as him. The Commission had prepared a package of countermeasures to respond to the American moves, which were due to come into force on April 15. To begin with, European duties were supposed to hit 26 billion euros of American goods.

But European governments have since watched tariffs escalate with China. Reciprocal duties then reached nearly 150 percent, a de facto embargo, and tensions have spread to visas for Chinese students and the export of rare earths to the U.S. And the deal signed last week to end the tightening still maintained significant tariffs: 30 percent for Chinese goods exported to the U.S., 10 percent for American goods purchased by the Chinese. Those tariffs are double those in place before the president's second term.

The Chinese lesson has opened our eyes: a trade war with Trump risks generating strong tensions and instability, which could be put to an end with an agreement that would provide for a level of duties that would hardly be lower than the current 10 percent. This is why today the Europeans have abandoned the proposal for a reciprocal elimination of tariffs, already bitterly rejected by American emissaries. And instead they are preparing to settle for the current level, without foreseeing significant retaliation: a compromise that was unthinkable until two months ago.

The 10 percent American tariffs translate into a slowdown in growth of about 0.1 percentage points for Europe, according to estimates by the Kiel Institute for the World Economy. Germany would be hit hardest (-0.2), while Italy and France would lose 0.07 points of growth. About a tenth of the expected change in GDP for 2025. A negative effect that is probably acceptable, especially when compared to the initial premises. If the European Union were to respond with its own tariffs on American goods, the effects on GDP would be more pronounced: tariffs often tend to damage those who impose them more.

An agreement, like the one Trump signed with the United Kingdom, would put an end to the enormous uncertainty that has emerged from the trade war, and avoid new duties on pharmaceuticals and semiconductors. It would then be possible to return to focusing on the challenges that await the continent: starting with the relaunch of lost competitiveness, to prevent the Draghi report from remaining yet another plan forgotten in a drawer in Brussels.

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