BREAKINGVIEWS-EU’s best tariff move is to stall a weaker Trump

By Neil Unmack and Yawen Chen

LONDON, Feb 23 (Reuters Breakingviews) - Europe’s best bet is to stall Donald Trump, rather than play hardball. Now the U.S. president’s key tariffs have been voided by the Supreme Court, the European Union could tear up last year’s trade deal and demand better terms. Yet given Washington can inflict pain through other levies and non-trade means, buying time looks smarter.

At first glance, the European Union could use Trump’s setback to unpick its 2025 deal. That was born of the president’s ability to impose levies at will with little congressional oversight – which he will now find harder. His stop-gap measure, a flat rate imposed on all goods under Section 122, expires after 150 days. European Commission boss Ursula von der Leyen could instead push for a lower rate than the headline 15% agreed last year.

Yet that would bring risk for uncertain reward. The current temporary situation is not actually that painful: Goldman Sachs analysts estimate the Section 122 tariffs, which apply to a broader range of goods than the deal struck last year, will result in an effective EU tariff that is a mere 0.9 percentage points higher. And there are still multiple uncertainties. Trump may be able to extend that regime, as ING analysts suggest. While the current one seems unfair, as it lowers the tariff rate on states like China or Brazil, that could fade if Trump makes good on his pledge to launch more aggressive tariffs into specific countries or sectors through so-called Section 301 investigations.

Moreover, Trump has not lost his so-called “escalation dominance”. Section 301 investigations, while lengthy and subject to congressional oversight, could hit hard: individual countries like Ireland could be targeted for pharmaceuticals or tax, as could states that imposed digital taxes, such as France. And since those might affect different EU members in different ways, Brussels may struggle to come up with a coherent response. The bigger issue is that Europe still needs U.S. help on Ukraine, to maintain sanctions on Russia and share intelligence. Antagonising Trump could backfire badly.

Stalling tactics therefore make sense. The deal Europe struck with Trump last year was already held up in the European Parliament, due to the tensions with Greenland. European leaders can make clear that they still back those terms. Delaying, which is what the European Parliament appears to be doing, is the logical step – at least until the threat of more aggressive Section 301 tariffs recedes.

The risks of further Trump levies will never disappear, but time may also favour the EU. U.S. mid-terms this year could see the U.S. president lose one or both houses of Congress. This would make it harder for him to impose Section 301 levies, and the need for Congress’s support may provide Europe with more leverage to renegotiate the 2025 deal and other tariffs. That may be a better time to play hardball.

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CONTEXT NEWS

The European Commission on February 22 called on the United States to stick to the trade deal struck between the two blocs, despite the U.S. Supreme Court’s ruling that Donald Trump’s so-called reciprocal tariffs are illegal.

“A deal is a deal,” the Commission said in a statement. “As the United States’ largest trading partner, the EU expects the U.S. to honour its commitments set out in the Joint Statement – just as the EU stands by its commitments.”

The Supreme Court in a 6-3 ruling on February 20 voided most of the tariffs Trump imposed in 2025, finding that the emergency law he relied on did not allow the imposition of the levies. Using a different statute Trump announced first a 10%, then a 15%, global levy that could last five months while the administration searches for more durable workarounds.