‘Force with force’: DGAP calls for aggressive EU strategy in US trade dispute

Officials from the German Council on Foreign Relations (DGAP) state in their public announcements that the EU should respond to the US government “force with force” to stop it.

Brussels’ measures against the Trump administration’s tariffs have so far been extremely timid. In April, the EU prepared a list of US goods threatened with retaliatory tariffs in response to US steel and aluminum tariffs; this list includes goods such as soybeans and Harley Davidson motorcycles, valued at 21 billion euros.

Additionally, it prepared another list of US goods worth 95 billion euros, planned to be finalized next week; this list includes cars and auto parts, aircraft, medical devices, and chemicals.

‘The only way to fight Trump is to risk instability’

The EU’s cautious approach is causing growing dissatisfaction among economic experts and political advisors. For example, DGAP expert Markus Jaeger argues in his new article that the EU should adopt a more aggressive policy.

Jaeger states that attacking US states where Trump has a broad voter base with tariffs is pointless, as these measures “rebound without hitting Trump.” Instead, he suggests that directly addressing “the president’s cost-benefit calculations” would be a better approach.

The German expert points out that past experiences have shown Trump avoids a “comprehensive financial instability risk” and withdraws tariffs when such a risk emerges. He recalls, for instance, that a significant stock market decline prompted Trump to freeze the tariff war against China.

Therefore, Jaeger calls for the EU to switch to a strategy involving a “credible and effective retaliatory threat,” stressing that, if necessary, an escalation of the conflict against “hostile protectionist measures” should not be avoided.

According to Jaeger, a former employee of Deutsche Bank Research, “risking comprehensive instability” if necessary is the only tactical way to defend against Trump.

‘China did what the EU couldn’t do against the US’

A more fundamental critique came from another DGAP expert, Shahin Vallée.

Vallée previously served as an economic advisor to EU Council President Herman Van Rompuy, then-Economy Minister Emmanuel Macron, and finally George Soros.

Vallée argues that the EU’s efforts to understand and deal with US President Donald Trump after his re-election have been a “complete failure.”

The DGAP expert argues that the EU failed to recognize the need to respond to Trump “force with force,” “openly and visibly.” He believes Brussels missed the “extraordinary opportunity” that arose when Trump was “colliding head-on with the entire world simultaneously.”

According to Vallée, it would have been possible to make Trump yield if action had been taken to isolate the US by immediately forming alliances with countries like China or Canada.

Vallée asserts that China achieved this success by “resisting and leveraging its power in critical areas,” compelling the US to “completely surrender.” He further claims China managed this without needing EU cooperation in a future economic war with the US.

According to the expert, the EU is currently stuck in the next round of tariff threats and will face even stronger pressure in the future.

‘Respond to force with force’

In this context, Vallée insistently calls for the EU to make a “complete U-turn” in its economic policy towards the Trump administration.

According to the author, as a first step, Brussels should immediately implement retaliatory tariffs against US steel and aluminum tariffs. Simultaneously, it should announce new counter-tariffs against automotive tariffs and suspended “reciprocal” tariffs; this should cover imports from the US exceeding 150 billion euros.

Secondly, the EU should restrict exports of goods that the US cannot substitute. Vallée gives the example of lithography technology used in semiconductor manufacturing, likely referring to equipment produced by the Dutch company ASML, which is used in manufacturing the most advanced chips and currently has largely no alternative, at least in the West.

Thirdly, the DGAP expert advocates for measures against US service sector imports. These measures include imposing digital taxes on the profits of large US internet companies on one hand, and restricting the activities of US financial service providers benefiting from European assets on the other.

Vallée advises being prepared for a “sharp escalation” of the conflict in this regard.