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President Donald Trump’s tariffs, , arise from an obsession with trade deficits. The tariffs are arbitrary and have no connection with any objective assessment of the tariffs applied by third countries. Thus, high-tariff countries including Brazil and Turkey are subject to the lowest tariff rate of 10% because they happen not to have bilateral trade deficits with the US. The declared objective of the policy is to maintain high tariffs until the US deficit with a country is eliminated, though there appears to be no intention to bring tariffs below the 10% level, or to reduce protective sectoral tariffs, such as those on steel, aluminium and cars.

Clearly, Trump’s announcement marks a turning point – even though the US disengagement from rule-based trade has complex causes and has been developing over time. The end of US leadership does not however necessarily imply the end of a rule-based trading system. The world now faces a collective-action problem. For most countries there is a clear value in maintaining rule-based trade relations, but the prospects of partially alleviating the costs of US tariffs may prevent countries from acting collectively to preserve rule-based trade.

Instead, too much energy risks being diverted into bilateral negotiations. Since Trump’s main objectives appear to be to erect a tariff wall around US manufacturing and to use tariffs as a source of revenue, bilateral negotiations may at best place countries in slightly less bad positions than their competitors. More worryingly, some countries may seek better treatment by offering to the US preferential access to their markets in a manner incompatible with World Trade Organisation rules. Others may conclude that the world is now without rules and WTO-inconsistent policies can be adopted. This could cause a protectionist spiral similar to what was experienced in the 1930s.

From the European Union’s perspective, a three-pillar strategy to respond to US tariffs . This involves negotiating with the US from a position of strength, including the adoption of proportionate countermeasures; diversification of trade relations through ratification and conclusion of bilateral trade agreements; and more measures to do away with obstacles to the EU single market. A fourth pillar should be added to this strategy: willingness to lead a coalition in support of rules-based trade.

This coalition could be extended initially to countries that are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), although it should be expanded to include more participants from the Global South.

The coalition could be structured around three action points:

1. Reaffirmation of the value of WTO rules and principles, and a commitment that any measures in response to the current crisis should not harm the interests of those countries that continue to abide by the rules.

2. While not all members of the coalition would adopt countermeasures, they would agree on the legitimacy of proportional responses to US actions that breach the most basic principles of public international law and of the global trading system. All participants should therefore be ready to join a WTO dispute-settlement case against the US tariffs.

3. A recognition that the WTO needs major reform, which should address a number of legitimate concerns raised by the US and other WTO members.

WTO reform is important to avoid any misperception that the coalition simply aims to support a status quo that is no longer viable. While it is unlikely that the current US administration will engage in good-faith negotiations to reform the WTO, it is important to send a message that can resonate positively with US business and other US constituencies.

In this connection the reform plan should include a readiness to renegotiate the balance of tariff commitments, reinforcement of rules to address level-playing-field issues, such as those  relating to subsidies, and a review of the jurisprudence of the WTO Appellate Body as part of a broader dispute-settlement reform.

The EU or a CPTPP member should convene a meeting of trade ministers to agree this approach. Ministers could also discuss the November 2025  as an opportunity to put WTO reform on the agenda of heads of state and government, and to develop a common strategy for the next WTO Ministerial, in Cameroon in March 2026. In addition, ministers should discuss reinforced cooperation between the EU and CPTPP countries. The coalition could therefore provide the collective leadership that is needed to avoid a harmful repetition of history.