By Dan Mullaney

From one perspective, “Liberation Day” (April 4, 2025), when the Trump administration imposed tariff levels not seen for 90 years – was the day the dam finally burst from long pent-up unaddressed US trade concerns.  The international trading rules and system had proven rigid and inflexible in the face of consistent, long-standing and mounting US complaints about trading partners’ tariff and non-tariff barriers and about the non-market economy tilt to the trade playing field.  As the dam burst, the current administration called a halt to the low and non-discriminatory “MFN” tariffs it had applied since the General Agreement on Tariffs and Trade in 1947 – tariff obligations that the US believed had taken away US leverage to negotiate — and unilaterally decided to offset those barriers and uneven playing field with high tariffs.

[related] The multilateral system has not been erased:  both the international trading rules and the US objectives of eliminating trade barriers and addressing non-market economy policies and practices remain.  If there is a desire to re-establish international trading rules, and if that system is to include the United States, then it may be important to make those trading rules function better to address legitimate US concerns.  The key can be found in the many provisions of the US-EU framework agreement that do not address tariffs, as well as the bilateral agreements with other trading partners that followed, which elaborated on the issues and concerns.

The US-EU Agreement lays out numerous obligations to address unnecessary regulatory barriers to trade and investment, both with respect to particular sectors and regulations and more generally – for instance, committing to enhanced cooperation to develop common standards for the transatlantic marketplace and to facilitate product testing.  It addresses the reduction of non-tariff barriers to food and agricultural products, unjustified digital trade barriers, and the enforcement of internationally recognized labor rights. It also includes provisions on cooperation vis-à-vis non-market economy policies and practices and supply chains, among many other provisions.

These are long-standing US objectives, and ones that the EU generally shares, at least in theory, but which have not been achieved despite years and sometimes decades of effort.

Other US bilateral agreements in 2025 are also relevant and revealing

Switzerland’s agreement provides for the application of the WTO Decision of the Technical Barriers to Trade Committee on Principles for the Development of International Standards, Guides and Recommendations (2000).  This decision recognizes that international standards (which give rise to a presumption of conformity with WTO international trade obligations) are the result of an open and consensus-based process, not limited to particular standards development organizations.  These include standards on which US standards and regulations are based, but which the EU does not recognize as international.  This puts US products at a disadvantage in the EU. Notably, the US-EU agreement does not contain this provision, suggesting that removing this barrier is at best a work in progress.

Also of concern, despite the commitment in the bilateral agreement to address unjustified digital trade barriers, are the numerous assurances from various EU officials that discussions with the US on the Digital Markets Act or the Digital Services Act are off the table because they would interfere with the EU’s “regulatory sovereignty.”  The WTO Agreement contains requirements that Members notify measures that impact trade, allow Members to comment on those measures and take those comments into account.  See, e.g., Article 2.9 of the WTO Agreement on Technical Barriers to Trade.  This includes how those measures are enforced.  Far from an assault on “regulatory sovereignty,” this is the very process by which the WTO avoids conflict and helps remove unnecessary trade barriers. Ideally, concerns about the DMA and the DSA and other digital measures would be the subject of bilateral discussions, not insulated from them on “sovereignty” grounds.

Further, both the Malaysian and the Cambodian Agreements contain provisions that protect the ability of US agricultural producers to use common food and agricultural terms in those markets.  They also require transparency, fairness, and rigor in the protection of “geographical indications” (GIs), like “Parmigiano Reggiano,” for food products whose quality, reputation, or other characteristic is attributable to its geographic origin.

“The EU might tout that the recently agreed EU-Mercosur agreement will stop the sale in Brazil of non-European parmesan”

These provisions are there because the EU systematically presses its trading partners to stop anyone from using terms that even “evoke” any one of hundreds of food names that the EU unilaterally considers to be its GIs.  That is, beyond securing access for its products in its trading partners, the EU actively prevents other countries, like the United States, from shipping its products under names that are recognized as common names outside of Europe.  The EU might tout that the recently agreed EU-Mercosur agreement will stop the sale in Brazil of non-European parmesan;  it’s less clear whether that would be a welcome development for this Administration.

Nor is this approach an anomaly.  The EU’s agreement with the UK calls for “dynamic alignment” with the EU on food-related sanitary and phytosanitary (SPS) measures.  This means that not only is the EU securing access for its products in the UK (and vice versa), it is also actively exporting its own agricultural trade barriers to the UK, blocking US access to the UK market.  Other EU agreements do the same, including with respect to industrial product regulations.

Many in the EU over the years have heralded the “Brussels Effect,” under which, because of its market power and regulation-forward approach, Brussels asserts itself as the standard setter for the world.  Brussels has been, effectively and proudly, creating global rules, with – as suggested by the EU approach to the DSA and the DMA — little or no input from trading partners.

“It is fair and perhaps wise to consider whether non-EU trading partners like the United States are as thrilled at that prospect as the EU has been”

The United States and the EU have been working for decades to find a way to address these non-tariff barriers to bilateral trade, including their spill-over impacts on joint third country markets, and to coordinate on non-market policies and practices.  Those efforts included a huge multi-year effort to negotiate a comprehensive agreement, the Transatlantic Trade and Investment Partnership (TTIP), that would have addressed virtually all of these issue.  The efforts also included follow-on initiatives over two administrations – Trump 1 and Biden — to address these issues on a narrower basis, after the EU concluded that it would not move forward on TTIP.

Those efforts failed, in no small part due to rigidities in the institutions and inflexible and narrow interpretation of international rules.  The failure of the General Arrangement on Steel and Aluminum negotiations – which should have resulted in an agreement to incentivize bilateral trade in sustainable and market economy steel — is a case in point. These efforts also failed from a lack of any sense of urgency, the belief that the old and inflexible ways would prove strong enough to prevail against the mounting new challenges and were not at risk.

Now that it is clear that this rigidity is a weakness, not a strength, and that the situation is truly urgent, it is time to revisit those rules and approaches and find a path forward.

The same applies to the World Trade Organization as an institution.  The US communication on WTO reform [WT/GC/W/984], recently circulated in the WTO General Council on December 15, 2025, advocates strongly for numerous reforms aimed at making the institution more sustainable and relevant.  Space limits do not permit a full discussion here, but WTO Members should pay close attention to it.

Conclusion

The agreed rules of the multilateral system have for decades been a source of strength for both the United States and its allies.  But to be sustainable, the rules need to continue delivering benefits to their participants, even as circumstances change.  That a major participant believes that the system has not done so is a fundamental problem that must be addressed if there is any hope of restoring a system of multilateral rules and alliances.  Or at least one that includes the United States.  To be clear, the United States is almost certainly weakening itself by alienating allies and pulling away from a multilateral system that it helped create.  But the US administration apparently believes that staying in a rigid system that did not deliver needed outcomes was weakening it more, and acted accordingly.

The path to re-establishing a multilateral system of rules that includes the United States is to re-examine where the current rules have fallen short, at least from the US perspective, and take action to address the shortcomings as appropriate.  The immediate vehicle to do so is to examine closely the set of bilateral framework agreements reached in 2025, which offer a clear roadmap for what should be done, and to use those to negotiate rules and outcomes that address the current challenges.

About the author:

L. Daniel Mullaney is a nonresident senior fellow with the Atlantic Council’s Europe Center and GeoEconomics Center. Most recently, he served as assistant US trade representative (AUSTR) for Europe and the Middle East in the Office of the United States Trade Representative (USTR) from 2010 to 2023. Before assuming the post of AUSTR, he served as senior trade representative in the US Mission to the European Union in Brussels.

Der Beitrag US tariffs: It’s time to find a path forward erschien zuerst auf Atlantik-Brücke e.V..

Much has been said about the unequal terms of the US-EU trade deal reached in Turnberry, Scotland, in July. Two camps have emerged: those who see Europe as having prematurely capitulated to US coercion and those who see Europe as having had little choice.

By Elizabeth Baltzan

Any assessment of the outcome of the Turnberry negotiations—and, therefore, any assessment of where to go from here—hinges not on the negotiations themselves but on the amount of leverage the two parties brought to Turnberry. The European Union (EU) had less of it. Europeans have a goods export dependency on the United States that the United States does not have with any country, let alone those in Europe. This asymmetry is long-standing, an outcome of the post-war trade system that emerged after Bretton Woods. That system was grounded in a model of export-led growth. As the richest market and with the lone currency pegged to gold, the United States was the target designation for others’ exports, not least so that European countries could earn dollars to rebuild.

US negotiators of that era were comfortable with asymmetrical concessions because they believed the global economy as a whole would grow, aggregate demand would rise, and all trading nations could benefit from increased production. The United States did not undertake these commitments with the expectation that increased imports would come at the expense of US workers or producers. At some point, however, that is just what happened, contributing to the Nixon Shock of 1971. Part of Richard Nixon’s goal in allowing the dollar to float was to correct for overvaluation that had depressed US export competitiveness. The accession of China’s non-market economy to the World Trade Organization (WTO) in 2001 accelerated US deindustrialization and, along with it, the loss of jobs that had provided many blue-collar Americans with lifelong economic security. Today, this is known as the China Shock.

“The last three years have exposed all too well, exports are not the only area of asymmetrical European dependency.”

As the last three years have exposed all too well, exports are not the only area of asymmetrical European dependency. The EU has also relied on the United States for its security—another outgrowth of the post-war environment. The United States was not only the market of first and last resort, but Europe’s security guarantor. To be sure, this was not an altruistic undertaking. The United States sought to keep Europe democratic and market oriented, part of an overall effort to fend off the threat of communist encroachment.

European prosperity flourished. Today, more than half the Group of Seven (G7)—the club of rich countries—comprises European democracies as well as all three former Axis powers. Nevertheless, these dependencies persisted.

The China Shock, the financial crisis, and popular backlash

As the China Shock began to unfold in US communities, the 2008 financial crisis and resulting recession severely widened inequality and aggravated precarity in many of those same communities. The one-two punch of deindustrialization and the Great Recession sparked popular backlash against a global governance regime seen as serving the interests of elites at the expense of the middle and working classes. In retrospect, this backlash can be understood as the beginning of the end of the United States’ willingness to serve as the market of first and last resort.

[related]In 2013, academics began to document the China Shock, formally publishing the results of their work in 2016. These results showed that US imports from China had caused a significant loss of manufacturing jobs, concentrated in particular regions, with economic effects that lasted throughout workers’ lifetimes. The researchers also linked the China Shock to electoral outcomes. In 2015, the Chinese government adopted a Made in China 2025 industrial strategy that promised to transform China into a producer and innovator of cutting-edge goods. The combination of the China Shock and Made in China 2025 triggered a profound and rapid shift in US thinking. Policymakers who had supported the effort to create a global free market confronted the rise of a non-market economy that was dominating one critical industrial sector after another. Made in China 2025 sought to expand that dominance from steel, aluminum, and glass to advanced sectors such as electric vehicles, robotics, and aerospace. It was precisely to avoid that kind of dominance that the architects of Bretton Woods planned to embed antimonopoly rules in the global trading system in 1948.

The “free trade” paradigm breaks down

Made in China 2025 was inspired by Germany 4.0, Germany’s industrial strategy, and both were grounded in export-led growth. As early as the 1970s, the United States complained that Germany was promoting exports at the expense of domestic consumption.

In 1995, Europeans and Americans led the creation of an entirely new trade regime, yet this failed to address the long-standing transatlantic tension of Germany’s export orientation. Moreover, the tariff asymmetry dating back to the founding of the General Agreement on Tariffs and Trade (GATT) lingered; the US tariff cap was 3.4 percent, while Europe’s was 5 percent. While the United States sought to use the narrower tools of trade remedies (known as “trade defence” in Europe), the WTO Appellate Body over time eroded the strength of those tools, even creating commitments that the parties had expressly declined to make during negotiations. The EU has been well aware of this dynamic, having lost the first of several disputes involving one of the commitments in question.

The 2016 double shock of Brexit and the election of Donald Trump should have served notice that popular discontent was manifesting as an angry rejection of the system as a whole. Yet trading partners who had come to rely on export-led growth largely rejected calls for change, instead pressing for more of the same. Similarly, despite a clear message that NATO partners needed to bear more of the burden of collective security, now-wealthy allies neglected to step up.

The COVID-19 pandemic drove home the vulnerability that comes with that kind of domination. Not only did shortages of personal protective equipment prove lethal, but production around the world was hamstrung when Chinese lockdowns persisted.

The Biden reset and Trump 2.0

The Joe Biden administration came into office offering strong support for the transatlantic relationship, from declaring a truce on rancorous trade disputes like Boeing-Airbus in 2021 to providing military support to Ukraine in the wake of its invasion by Russia. Europeans consistently expressed fear of a second Trump administration but, in the end, seemed disinclined to do much to bolster the Biden administration’s efforts to address the core challenge of US deindustrialization. The European posture was infused with a conviction that the only proper course was restoration of the status quo ante. Early on, one European paper characterized Biden as “Trump with manners,” a line that administration officials would routinely hear in person. To meet climate commitments, as well as to begin to address deindustrialization, the United States enacted the Inflation Reduction Act (IRA). Europeans responded by complaining that the IRA represented a “continuation of President Trump’s hard-nosed America First policies.” A more pragmatic and less ideological analysis revealed that the IRA played to European manufacturing strengths and thus presented an opportunity, rather than a constraint, for European exporters.

“Europe risks not only the loss of export opportunities to the United States, but the possibility that the European market will itself become the destination of choice for the next China Shock.”

Now we have the second Trump administration. It is indeed engaged in hard-nosed “America First” policy, deploying tariff authorities in unprecedented ways while criticizing trading partners for regulating their economies contrary to the preferences of some US multinational corporations—the very thing the Biden administration had declined to do. This policy led not only to Turnberry, as the Europeans felt a trade war would lead to an even worse outcome, but to an ongoing discussion about European regulatory sovereignty.

The EU position is more precarious still. Europe risks not only the loss of export opportunities to the United States, but the possibility that the European market will itself become the destination of choice for the next China Shock. All this is happening as the Trump administration expresses fatigue with guaranteeing Europe’s security.

The way out

Is there a way out of this downward spiral? Yes. But it requires policymakers around the world to spend less time pining for the past and more time focused on what to build next.

Fortunately, there are signs that a shift is taking place. Germany’s willingness to remove the debt brake for defense spending suggests that the long-standing goal of having Germans consume more and export less might indeed be coming to pass—all while addressing outsized dependence on the United States for security. It is a fraught debate. If Germany pairs military Keynesianism with austerity, the result could be an acceleration of authoritarian sentiment reminiscent of the policies that ushered in the end of the Weimar Republic. Still, the shift in approach is a positive step.

Germany’s efforts have been followed by a pledge for Franco-German cooperation, signaling a shared commitment to charting a new path for Europe to extricate itself from these challenges. On a still broader European scale, the recent report by Mario Draghi rightly argues that the EU must do more to integrate and unleash the power of the internal market.

Similarly, there are signs that China is wrestling with the harmful consequences of its economic model. Xi Jinping recognizes that fierce internal competition leads to excessive production (much of which is then exported). As finance professor Michael Pettis has argued for years, China must find a way to encourage greater domestic consumption, relieving the emphasis on exports that is problematic for advanced economies and has also contributed to premature deindustrialization in less advanced economies.

“If other governments succeed in reducing their dependencies, the United States will have less influence.”

The United States must also adjust. If other governments succeed in reducing their dependencies, the United States will have less influence. Shifting overnight to a world of pure power politics, coupled with the erosion of US domestic rule of law, will have implications for the long-term viability of the dollar as the reserve currency. That, in turn, will have implications for the servicing of US debt, which is expected to grow as a result of the One Big Beautiful Bill.

The answers suggested here lie principally in the domestic policies of each relevant economy. Many trade experts reach for trade tools, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and other free trade agreements (FTAs), as the escape hatch. Yet too few understand what these agreements actually do: They lock in existing supply chains rather than diversify them. This is especially true for intermediate goods. If Europe is looking to further strategic autonomy by diversifying away from existing dependencies—one of the goals of the Franco-German alliance—then signing agreements that incentivize half the content of an FTA good to come from non-FTA partners will not do the trick.

None of these transitions is without cost or pain. Europe has struggled for decades to complete the internal market. Still, even the shock of the first Trump administration did not move Europeans to minimize their exposure in any significant way. Weighing existential threats to Europe, Draghi—who recognizes the shortcomings of the old system—pleaded before the European Parliament: “Do something!”

China’s reorientation of its economy toward consumption will not be easy either, which is why it has not yet happened. But the potential consumption power of its huge domestic market means that China is not fated to play the role of a predatory global monopolist, distorting markets and crushing the ability of market-oriented producers to compete.

The biggest obstacle to moving toward a global trading system more suited to contemporary circumstances might be intellectual: the lingering belief that there is, in essence, only one way to do globalization and it was done in 1995. History tells us otherwise. The previous great globalization boom was grounded in UK hegemony, colonialism, and the gold standard. This model also once seemed inexorable. Yet the onset of World War I proved the beginning of the end. Countries struggled for two decades thereafter to salvage the gold standard, but they were eventually forced to accept the demise of what John Maynard Keynes referred to as a “barbarous relic”—and to come up with something else.

The post-war regime, suited for its era, encouraged dependencies that shifted over time from beneficial to unhealthy. We are now living through a period in which the adverse consequences of those dependencies have become manifest. Just as the architects of the post-war vision summoned the courage and imagination to create a new system to foster peace and stability, so must we.

Elizabeth Baltzan is a Senior Fellow at the Atlantic Council GeoEconomics Center and a former Senior Advisor to the US Trade Representative. 

Check out our other policy briefs for the Transatlantic Forum on Geoeconomics:

„Points of Vulnerability in the Battery Cell Industry“ by Kai Müller, Chief Financial Officer at PowerCo SE. and Sören Pippart, Senior Expert for Public Affairs at PowerCo SE.

„The dollar in the fight for US primacy“ by Martin Mühleisen, former International Monetary Fund (IMF) official and nonresident senior fellow at the Atlantic Council’s GeoEconomics Center.

„Waiting for the Big Bang: Executing the European Defense Build-Up in Germany“ by Robin Fehrenbach, Director of Research and Documentation at Atlantik-Brücke, Jakob Flemming, Senior Program & Research Manager at Atlantik-Brücke and Julia Friedlander, CEO of Atlantik-Brücke

„How to dismantle a reserve currency“ by Daniel McDowell, nonresident senior fellow at the Atlantic Council’s GeoEconomics Center.

„The summer of AI action plans“ by Alisha Chhangani, assistant director at the Atlantic Council GeoEconomics Center and Ananya Kuma, deputy director, Future of Money, at the Atlantic Council GeoEconomics Center.

Der Beitrag The road to Turnberry erschien zuerst auf Atlantik-Brücke e.V..