Tariff threat forces EU to hedge bets
Barely months into Donald Trump's return to power, America's global standing has been bleeding credibility at a staggering pace, forcing many nations to prepare for a post-American world as tariff theatrics rattle the world.
The American president's decision to impose a sweeping 30% tariff on EU exports has ruptured the fragile scaffolding of trust that long upheld the US-EU relationship.
Although Europe has repeatedly aligned itself with Washington, often to the bewilderment of its own citizens, it appears to be showing signs of hedging its bets. EU allies, long and strangely willing to toe the American line on so-called "common" security and economic interests, are beginning to scramble for cover from Washington's whims, as the facade of shared purpose wears thin.
The push for self-reliance is beginning to forge a rare moment of cohesion in the EU, finding an alternative to the disunity that marked the Brexit years. The shift was plain when European Commission President Ursula von der Leyen, while signing a cooperation pledge with Japan recently, remarked that the EU was now seeking "more reliable partners" to counter economic coercion and unfair trade practices — a barbed formulation that conspicuously sidesteps the US.
Timing, too, is everything. The EU has yet to clinch a free trade deal with Washington, and the sudden tariff spike has landed like a hammer blow amid delicate negotiations with a looming deadline set by Washington.
However, Europe's response is not simply reactive. European officials warned that such a tariff would "practically prohibit" transatlantic trade and inflict deep damage on economies that export over 20% of their goods to the US, with Germany alone sending over $174.5 billion worth of products in 2024.
Brussels activated a first wave of counter-tariffs, suspended only until August 6, covering €21 billion of US goods. A second package, initially targeting €95 billion, was whittled down through fierce internal lobbying to €72 billion, sparing items like diagnostic reagents, semiconductor-manufacturing machines and key medical devices deemed too critical to Europe's own supply chains.
Anti-Coercion Instrument
Meanwhile, EU diplomats quietly dusted off their most potent, never-used tool: the Anti-Coercion Instrument (ACI). Designed in 2023 to deter economic blackmail, the ACI can impose duties, quotas, investment restrictions and limits on public procurement against any country that "coerces" EU members.
Where WTO courts have failed, the mechanism allows qualified majority action — 15 states representing 65% of the EU population — circumventing the need for unanimity.
Analysts observe that just floating the ACI sends a powerful signal: Europe is done being a passive victim of trade bullying. Germany, once cautious about escalation, now publicly supports considering the ACI. France has long championed it. Even Italy's far-right leadership, initially tipped to cosy up to Trump, has resisted side deals and endorsed a firm, collective stance.
The recent EU-Japan pledge to deepen cooperation was one sign of the recalibration. So too is the EU's intensified internal debate over "strategic autonomy", a term that gained currency after Trump's earlier attacks on Nato and withdrawal from key international agreements.
The sentiment was even more audible in the Spanish prime minister's recent statement. At a business forum in Paraguay, he not only decried the US for "unfounded and unfair" measures, but also proposed using retaliatory funds to create an EU solidarity fund for affected industries.
Similarly, Denmark reported a record 74% public trust in the EU — up from 63% five years ago — crediting a shared sense of resisting external coercion. Earlier this month, the UK, still navigating post-Brexit independence, joined the WTO's interim appeals mechanism (excluding the US) to safeguard its ability to challenge future trade distortions. Asian allies are likewise on edge: Singapore's defence minister lamented that the US has shifted "from liberator... to a landlord seeking rent".
Strategic autonomy
A decade ago, the talk of "strategic autonomy" in Brussels elicited polite nods and little action. Today, it has become doctrine. In a recent interview with BBC, German Chancellor Friedrich Merz declared that Europe can no longer be a free rider on US security guarantees, announcing stepped-up defence spending and trilateral security dialogues with France and the UK (the so-called E3).
Together, the UK, Germany and France are working on a triangular alliance of major European powers, which Merz says will focus not just on security and foreign policy but on economic growth as well.
France and Germany have extended joint procurement plans, while Spain and Italy have explored loosening Nato's centrality in favour of EU-driven defence cooperation. Similarly, Spain and the Netherlands, once sceptical of EU defence, now champion flexibility in EU budget rules to fund military modernisation.
Even before taking office, the German chancellor had made waves on the night of his election victory by declaring that the Trump administration was "largely indifferent to the fate of Europe". Asked in the BBC interview whether his view had shifted, he responded that it had not, noting that Trump was "not as clear and as committed as former US presidents were, former US administrations were".
Observers point out that European defence budgets, long kept low relative to GDP, are now under political pressure to rise. The EU's joint procurement loan facility — €150 billion in shared borrowing — aims to accelerate drone and artillery acquisitions.
An Institute for Global Affairs (Eurasia Group) report finds that Western Europeans are urging their leaders to "stand up to Trump" and even seek partial autonomy from Washington. Even before Trump's return, think tanks were noting how Washington's browbeating of Europe and Latin America was prompting those regions to forge independent arrangements — from a European "army of Europe" to new Asian trade pacts — to hedge against US caprice.
One Pew report found that in the past year, only 27% of Europeans have confidence in Trump and fear is growing that a faltering US will neglect Nato and other security guarantees. Remarkably, the 2025 Democracy Perception Index shows China overtaking the US as the world's most positively viewed major power. Beijing is now negotiating a standalone climate pact with the EU.
Analysts calculate that Chinese clean tech exports reduced global emissions by roughly 1% in 2024, strengthening Beijing's claim to climate leadership. Latin American nations are doing the same. Brazil, fresh from calling US tariffs "overtly political", established a new Brazilian tax office in Beijing — only the fifth of its kind — signalling where Rio now sees its most dependable partner.
The old trust in American stewardship is obsolete, and Europe's halting steps toward strategic autonomy and the assertive postures of others show that a shared resolve to envision a world without Uncle Sam's shield is gaining momentum.
The writer is a Lahore-based senior journalist