European Economic Update – Beyond the Pause: How the EU Is Already Redefining Its Trade Strategy

U.S. President Donald Trump’s announcement on April 9, 2025, of a temporary suspension of tariffs on European goods did not put an end to transatlantic trade tensions. It merely marked a tactical pause. For several months, the tariff escalation initiated by Washington has profoundly shaken the European Union’s economic balance and triggered a significant strategic pivot in Brussels.

While the European Commission still favors a negotiated solution, it has already moved to reinforce its defensive instruments, signaled a shift toward greater economic sovereignty, and accelerated its trade diversification efforts. Regardless of whether an agreement is reached or tariffs resume, the EU’s strategic shift is already underway.

Temporary relief, long-term shift

In 2023, trade between the EU and the United States reached €1.6 trillion, making the U.S. Europe’s largest economic partner. Yet critical sectors—automotive, tech, energy—remain highly vulnerable to unilateral American measures. Between February and April 2025, Washington successively imposed 25% tariffs on steel, aluminum, and automobiles, along with a generalized 20% import surcharge on EU goods—underscoring the growing unpredictability of U.S. trade policy under Trump.

Brussels’ response was gradual but firm, launching an initial wave of countermeasures on €26 billion worth of American products. The targeted goods matched the U.S. measures in volume and included a broad range of sectors. Among them were common food products (such as corn, frozen vegetables, fruit juices, and almonds), cosmetic items, as well as industrial and consumer goods (including motorcycles, pleasure boats, dishwashers, and certain steel and aluminum products). The surprise 90-day moratorium announced on April 9 by Trump—followed by a similar pause in the trade dispute with China in May—shifted the momentum. The European Commission opted to freeze its second wave of retaliation, while making clear that the era of predictable U.S. trade relations is over. Going forward, the EU will take the necessary steps to reduce its dependence on the United States—particularly in trade.

A slow but coherent european response

While some observers criticized the EU’s initial delay in reacting—during which the United States launched several successive waves of tariffs between February and April—the response allowed time to build consensus among Member States. This alignment was achieved despite the differing levels of exposure to U.S. trade across the EU. Even Italy under Prime Minister Giorgia Meloni, considered a close ally of Donald Trump, ultimately supported the common position. With the exception of Hungary, all EU countries backed the Commission’s proposed countermeasures. The Franco-German tandem played a central role, jointly advocating for a firm but coordinated response.

Among economic actors, alignment was less obvious. President Emmanuel Macron convened a meeting on April 3, 2025, at the Élysée with representatives from industries most affected by U.S. tariffs. He called on French companies to suspend investments in the U.S., but major groups such as TotalEnergies, Stellantis, and CMA CGM announced their intention to maintain their plans. Many industrial players urged caution and de-escalation—or even considered relocating operations to the U.S. to bypass tariffs altogether.

Leveraging the EU’s institutional arsenal

As part of the measures considered in response to U.S. tariffs, the Anti-Coercion Instrument (ACI) has been raised by European officials as a credible option. Originally developed in late 2023 in the context of growing economic pressure from China—specifically following a dispute involving Lithuania—the ACI was designed as a powerful instrument to deter foreign economic intimidation. It empowers the European Commission to act without requiring unanimous approval from Member States, significantly enhancing the EU’s capacity to respond quickly and decisively.

The ACI is designed primarily as a deterrent against economic coercion, providing a structured framework for proportionate and calibrated countermeasures once diplomatic avenues have been exhausted.

These include:

• The imposition of tariffs
• Restrictions on services and IP-related trade
• Limits on access to EU public procurement and foreign direct investment
• Suspension of marketing authorizations for specific products
• Blocking of targeted foreign investments

The fact that the EU is openly considering deploying a mechanism originally designed for China against the United States signals a profound shift in its strategic posture—and in the purpose of its economic defense tools.

Meanwhile, digital regulations such as the Digital Markets Act (DMA) and the Digital Services Act (DSA) are no longer just theoretical levers. On April 23, the European Commission imposed its first major sanctions under the DMA: Apple was fined €500 million and Meta €200 million for failing to comply with obligations intended to limit abuse of market dominance. These moves underscore a growing willingness to challenge U.S. tech giants on European soil.

In parallel, the idea of banning certain American platforms has resurfaced in public debate, particularly X (formerly Twitter), whose moderation practices and political orientation under Elon Musk—an outspoken ally of Donald Trump—have raised concerns in the EU. While no formal action has been taken, the fact that such measures are being publicly discussed reflects a broader reassessment of how the EU might leverage its regulatory power.

A core lesson: trade diversification

One of the clearest outcomes of the current crisis is that the EU has already begun to actively diversify its trade partnerships.

The recent revival of negotiations with Mexico, and several key Asian partners illustrates a shift from reactive trade defense to proactive economic diplomacy. Even the EU-Mercosur deal—which has long faced resistance from several Member States, especially France, due to concerns over its potential impact on the agricultural sector—is now seen as more appealing by French officials in light of Donald Trump’s aggressive trade policy.

In parallel, the EU has scheduled a high-level summit with China in July 2025. Ahead of this meeting, Commission President Ursula von der Leyen emphasized on April 8 the shared responsibility of the EU and China—two of the world’s largest markets—to uphold a reformed, fair, and rules-based global trade system. She called for a negotiated resolution, highlighting China’s key role in preventing trade diversion, particularly in sectors already affected by global overcapacity. A monitoring mechanism is expected to be established to track and address such trade shifts.

These initiatives show that diversification is no longer a distant goal—it is a tangible and accelerating strategy to reduce dependence on a single partner and reposition the EU within a more fragmented global trade environment. Europe is no longer merely reacting to crisis. Faced with renewed U.S. unpredictability, it is adopting a forward-looking approach centered on anticipation, balance, and diversification in its global economic relations.

Toward a new architecture of european trade?

The suspension of U.S. tariffs does not signal the end of this conflict. Rather, it reinforces the need for the European Union to act with greater coherence, anticipation, and strategic autonomy in its trade policy.

What we are witnessing is not just a pause—it is a realignment. Europe is quietly but firmly redefining its trade priorities around three pillars: strategic autonomy, institutional responsiveness, and global diversification. This shift—discreet but determined—may well shape the EU’s economic position on the global stage for decades to come.