Tooth and Claw: Why Europe Must Urgently Brace for a Two-Front Trade War
As the US and China turn trade policy into a tool of coercion, the EU must move from defensive regulation to credible economic deterrence. A commentary by Marco Buti, and Moreno Bertoldi
Over the past two weeks, global trade tensions—which had temporarily slipped into the background as international attention shifted toward the escalating conflict in the Middle East—have come roaring back to the forefront of the geopolitical stage. The relative quiet has shattered on two distinct fronts simultaneously.
On one side, in late May, a high-stakes, closed-door meeting of the European Commission was convened specifically to address the thorny problem of China’s massive—and relentlessly growing—trade surplus.
Just hours before the gavel fell, Beijing issued a thinly veiled ultimatum, threatening immediate and severe countermeasures should the European Union dare to adopt any restrictive provisions targeting Chinese exports.
On the other side, as June commenced, the Trump administration injected fresh volatility into the global markets by announcing a sweeping new round of tariffs.
This broadside targets more than 60 countries, prominently including the European Union (EU), under the explicit accusation that these nations either actively utilize forced labour or import goods heavily tainted by it, thereby inflicting severe economic damage on American export competitiveness.
To make matters worse, Washington has pointedly left the door open for further escalation, hinting that additional tariffs are already waiting in the wings, pending the completion of ongoing “investigations” into third-country industrial overcapacity.
This dual resurgence of friction, confronting Europe with economic hostility from both China and the United States at once, is by no means an unforeseen accident. Regarding the latter, any lingering hope that last July’s highly publicized “Turnberry Agreement” had successfully stabilized transatlantic economic relations for the remainder of the Trump presidency has officially evaporated into a mirage.
The reality is that the American president remains determined to erect tariff walls against imports from the rest of the world. He is now operating under a ticking clock: following a February Supreme Court ruling that struck down several of his previous trade measures as unconstitutional, the temporary legal mechanism used to sustain those tariffs is set to expire this July—and an increasingly friction-filled Congress is highly unlikely to grant an extension.
Consequently, Trump is actively seizing upon any available pretext to keep the protectionist wall he erected after Liberation Day entirely intact, if not fundamentally expanded.
For the EU, the critical question now hinges on Washington’s newest weapon of choice: Section 301 of the Trade Act. It remains to be seen whether this mechanism will merely be leveraged to replicate the tariff baselines already established at Turnberry—in which case the current flare-up represents little more than a temporary, albeit painful, spike in market uncertainty—or if it will be used to aggressively ratchet up duties, a move that would represent a flagrant violation of the solemn bilateral accords struck just a year ago.
Beyond the imminent threat of absorbing higher tariff penalties, what is truly alarming is the profound speciousness and hypocrisy of the arguments the Trump administration is employing to justify these punitive measures.
When it comes to high-minded issues like the eradication of forced labour and the auditing of supply chains, the United States has absolutely no moral high ground to stand on; its own domestic and systemic infractions run far deeper and are vastly more significant than any alleged shortcomings within the EU.
Such unprincipled, bare-knuckle manoeuvring inevitably sparks wider anxieties. It signals that on other crucial, unresolved multilateral dossiers—ranging from the regulation of digital platforms and the governance of Artificial Intelligence to the complex mechanics of global decarbonization—the United States will feel entirely uninhibited.
Washington seems prepared to act on the primitive principle that the argument of the strongest is always the best.
In this volatile environment, any rationale, no matter how intellectually dishonest or fundamentally illogical, is deemed valid if it successfully manufactures a casus belli. Dark, heavy clouds are once again gathering over the future of transatlantic economic cooperation.
Meanwhile, on the Asian front, the diplomatic facade is similarly fracturing. According to highly consistent, leaked accounts obtained by various journalistic outlets, the European Commission arrived at a stark conclusion during its confidential session: the current economic relationship between Europe and China is profoundly unsustainable.
The consensus within Brussels is that Europe is now forced to deploy a “more robust and coherent response,” fully acknowledging that such a firm stance will almost certainly trigger aggressive retaliatory measures from Beijing.
Beijing’s attempted pre-emptive bullying, therefore, has failed to achieve its intended chilling effect. Barring an improbable, wholesale structural adjustment to the Asian giant’s state-subsidized growth model, an outright trade war with China now appears mathematically and politically inevitable.
In recent months, the EU has admittedly taken several vital, proactive initiatives designed to aggressively curb its foreign dependencies and reinforce its long-term strategic autonomy. The legislative triptych comprised of the Industrial Acceleration Act, the Chips Act 2.0, and the Cloud and AI Investment Act all move decisively in this necessary direction.
Yet, it would be dangerously naive to imagine that either the United States or China will sit idly by and watch Europe insulate its markets without orchestrating a fierce blowback.
It is therefore a matter of utmost and overriding urgency for Brussels to fully operationalize its Anti-Coercion Instrument. Concurrently, Europe must map out its own industrial strengths—and they do exist—to identify critical European-made components and products whose sudden withholding would inflict severe, asymmetrical damage on both American and Chinese supply chains.
The synchronized deployment of these two levers would fundamentally alter the geopolitical calculus.
First, it would drastically raise the economic cost of Trumpian unilateralism, preventing the EU from being transformed into a defenceless regulatory playground for predatory US Big Tech firms, or subjected to a humiliating cycle of unfair revisions to treaties that are signed and instantly broken.
Second, it would provide the EU with a formidable, credible deterrent against Beijing. It would effectively neutralize China’s ability to weaponize its monopoly over indispensable resources, such as rare earths, to fracture European political resolve. Ultimately, this strength is the only thing that can keep the impending trade conflict safely contained.
Avoiding the escalating economic warfare currently looming on the global horizon would undoubtedly be the rational and preferred outcome for everyone involved.
However, as Jean de La Fontaine wisely illustrated in his immortal fable of the wolf and the lamb, the intended victim can do very little to negotiate peace if the predator has already resolved to attack.
If the EU wishes to avoid the tragic fate of the lamb, it must abandon its naivety and equip itself, without delay, with the sharp teeth of the wolf.
A previous version of this article was published by Il Sole 24 Ore
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
