The US administration’s latest threat to impose sweeping new tariffs on many of its closest allies signals a renewed embrace of aggressive unilateralism and misunderstood economics. This column argues that the only effective response is a coordinated one. Unified retaliation by a coalition of like-minded countries made up of the EU, Canada, Mexico, Brazil, and South Korea – which together account for more than 50% of all US goods exports – would be impossible for Washington to ignore and would send a powerful message that the rules-based global trading system is worth defending.
The White House revived its favourite economic weapon last week, threatening to impose sweeping new tariffs on many of the US’ closest allies. The proposed duties – 30% on goods from the EU and Mexico, 35% on those from Canada, 50% on imports from Brazil – signal a renewed embrace of aggressive unilateralism and misunderstood economics. The move follows a tense trade skirmish with China in April that saw tariffs spike to an unprecedented 145% before a fragile truce was reached – a truce set to expire in mid-August. Disturbingly, and unlike in President Trump’s first administration, the US now is not even attempting to justify its violations of WTO rules or its own free trade agreements. Thus, the world is now on notice: the main architect of the postwar global economic order seems intent on dismantling it.
For leaders in capitals from Brussels to Seoul, this presents a daunting challenge. The impulse to de-escalate, or for each capital to seek its own separate accommodation with Washington, is strong. But appeasement or fragmented, go-it-alone retaliation would be a strategic error. Such actions would only embolden further protectionism and accelerate the erosion of the rules-based system. The only effective response is a coordinated one. The US’ allies must form a united front, demonstrating that the principles of free and fair trade are not theirs to abandon.
This moment calls for a strategic coalition, led by the EU and including Canada, Mexico, Brazil, and South Korea. Acting in concert, these powers can answer Washington’s tariffs with a proportional, unified, and clearly communicated counter-response. The goal would not be to win a trade war, but to prevent one, by making the costs of American isolationism prohibitively high. In turn, this would help sustain the rules-based system – a key driver of global economic integration over the past 80 years.
An alliance of the like-minded
On its own, any single country – or even the EU as a bloc – has limited leverage against the US. The US market is simply too large and important. Retaliatory tariffs from one partner, while painful, can be weathered through trade diversion. Washington can absorb the hit from one front while its trade with others continues, mitigating the overall economic damage and weakening the retaliator’s resolve. This creates a classic collective action problem, where the fear of being isolated and economically damaged can lead to a race to the bottom, with countries undercutting one another to secure a better deal from Washington.
This is not a theoretical risk; it is already happening. Just this week, Japan agreed to a deal that sees its exports to the US fall under 15% tariffs while largely opening its own market to US exporters. Similarly, the Philippines agreed to a lopsided deal that subjects its own exports to 19% US tariffs while eliminating its own duties on American imports entirely. Such an arrangement, which Vietnam also earlier in July agreed to, violates the bedrock WTO principle of non-discrimination and sets a disastrous precedent. It is a clear signal that, when acting alone, smaller economies will be pressured into deals that undermine their own interests and the global trading system itself. The recent US bilateral deal with the UK, while less extreme, points in the same direction of appeasement through fragmentation – or viewed from the US side, of divide and conquer. This is not without historical precedent either; it closely resembles the bilateral deals forged in the 1930s, which proved highly detrimental to the global economy.
A coalition of like-minded countries, made up of the EU, Canada, Mexico, Brazil, and South Korea, would fundamentally alter the strategic calculus. Together, these economies are the destination for more than 50% of all US goods exports. A unified retaliation from this group would therefore be impossible for Washington to ignore. Instead of facing scattered pockets of resistance, the US would confront a single, massive economic bloc capable of imposing symmetric costs. Calculations show that a coordinated retaliation by this group of countries would account for over two-thirds of the costs that a hypothetical global retaliation would entail, wielding immense leverage.
The coalition’s strategic advantage lies in a fundamental asymmetry of leverage. While the allied group accounts for the majority of US goods exports, for most individual members the US represents a significantly smaller share of their export markets (with the notable exceptions of Canada and Mexico with US export shares of more than 75%). This imbalance gives the coalition a powerful lever. The US economy is far more dependent on the coalition for its exports than most coalition members are on the US market. Together, they can exert pressure that is impossible for any of them to apply alone.
Importantly, a coordinated, proportional retaliation is not an act of aggression but a legitimate, WTO-compliant tool for trade defence. By invoking these rights as a bloc, the EU and its partners would be making a powerful statement: the rules-based global trading system is worth defending. Such a clear demonstration of leadership is essential. It would signal to smaller countries around the world that they do not have to capitulate to damaging bilateral deals. Seeing the major trading powers act in concert to uphold international law would embolden them to join the alliance, understanding that while their individual retaliation may be insignificant, their collective participation strengthens the front and reinforces the legitimacy of the cause.
The counter-tariffs should be targeted for maximum political impact. The coalition represents the dominant export market for some of the most visible and politically influential US industries. Consider the automotive sector: a large share of US-made vehicles and auto parts are exported to Canada and Mexico, integrated into a deeply interconnected North American supply chain. Likewise, the EU is a primary destination for American aircraft and pharmaceuticals and medical products (50% of US pharmaceutical exports in 2023). Key agricultural exports, such as soybeans and corn, are also heavily reliant on these combined markets.
By jointly targeting these sectors, the coalition would create powerful domestic constituencies within the US with a vested interest in returning to freer trade. The pain would not be abstract or diffuse; it would be concentrated in industries and regions with significant political weight, demonstrating that economic nationalism comes with a steep domestic price.
Restoration, not retribution
Crucially, the coalition’s actions must be framed not as a punishment but as a necessary remedy designed to bring the US back into the fold. The messaging must be unified, public, and unambiguous. Through joint statements, the leaders of the coalition countries should declare that their countermeasures are a direct, proportional response to US actions. They should be clear: “We do not want tariffs. We believe in open markets and a rules-based order. Our measures follow the WTO guidelines for proportional retaliation, are temporary, and will be lifted the moment the United States rescinds its tariffs and returns to the path of cooperation.”
This approach offers Washington a clear off-ramp. It turns the tables, casting the coalition as the defender of the international system and the US as the rogue actor. Providing this de-escalation mechanism is vital. It signals that the goal is not to initiate a perpetually escalating conflict, but to restore the status quo ante. This message would also provide political cover for leaders within the coalition, allowing them to justify the short-term economic pain to their own populations by framing it as a principled stand for long-term stability and prosperity.
The logic is analogous to the effective use of economic sanctions, where the broadest politically feasible coalition is assembled to maximise pressure on the target state and close off avenues for evasion. Here, the target is not an adversary but an errant ally. The goal is persuasion, not collapse. But the mechanism is the same: collective action to demonstrate that unilateralism has unbearable costs.
The world cannot afford to wait and see how far Washington will push its protectionist agenda. Historical episodes teach us that reducing existing tariffs is lengthy and unpopular, thus the need to act swiftly. There is also strong evidence that trade policy uncertainty imposes significant costs on the global economy. Moreover, hesitation will be read as weakness, inviting even more disruptive policies. The threat is here and the time to build a united front is now. By forming a strategic tariff coalition, the US’ allies can defend their own economic interests while upholding the very principles of the global trading system that the US itself championed for generations. It is not a call to confrontation for its own sake, but a resolute, collective invitation for the US to rejoin the order it helped create.
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