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President Donald Trump’s plan for “reciprocal tariffs,” , is an existential threat to the rule-based trading system. Even the term ‘reciprocal tariffs’ is a misnomer. The US tariffs would be applied in retaliation against any non-discriminatory consumption tax, regulation or policy of which the Trump administration disapproves and would be not about reciprocity but rather a misguided attempt to balance trade bilaterally. If tariffs are implemented after 1 April – when Trump has asked for reports assessing which countries should be hit – the US will have placed itself outside the framework of the rules-based system it played a fundamental role in creating.

The US decision to abandon core World Trade Organisation principles has led to  to create the basis for a decoupling from the Chinese economy. There have also been calls for  committed to keep trade balanced. But, starting from the 1930s and the US’s 1934 Reciprocal Trade Act, rule-based reciprocity has been the basis for the substantial expansion of trade founded on stability of commitments, periodic negotiations and non-discrimination. If the European Union and other major trading partners were to decide to abandon WTO principles, the result would be total disruption of international trade and investment and an escalation of tensions that could lead to war. What the US does cannot kill the WTO or the global order, but how others react might.

The idea of ‘reciprocal tariffs’ raises questions about whether the US has any intention to engage in good-faith negotiations. Nevertheless, the European Commission has the duty to undertake exploratory discussions to avert a major trade conflict. The guiding principle should be to avoid entering into any commitment with the US that further undermines international law. This is not just a matter of consistency with EU values. It is also enlightened self-interest: entering into discriminatory commitments with the US would encourage others to do the same and would prevent the EU from questioning measures that harm its interests in third-country markets.

The EU should also prepare a case at the WTO that brings together as many impacted economies as possible. This would give a clear signal that WTO members are united in defence of the principles underlying the global trading system. The Commission should in parallel prepare a retaliation list, which should be announced as soon as any threat of reciprocal tariffs materialises. It should discuss internally the best legal option to implement such retaliation, while also heeding the calls of other economies to coordinate so that the impact of any retaliation can be maximised.

The commitment to rules-based trade should not ignore the need for major WTO reform. The WTO’s current rules do not provide a sufficient response to level-playing field concerns linked to China’s state capitalist model. The argument could also be made that some countries maintain very high tariffs that do not correspond to their current weights in the global economy. Institutionally, the WTO is too rigid in requiring consensus for any development of the rules. A solution needs also be found to ensure a functioning dispute-settlement system. These are all issues that should be addressed through negotiations and not unilateral diktat.

And the need for reform does not justify ignoring the fundamentals on which the system is based. Non-discrimination, freedom to apply internal taxes and regulations and stability of tariff commitments are as relevant today as they were in 1947 when the General Agreement on Tariffs and Trade was signed. The EU would be existentially damaged if the WTO system were to collapse. Its trade policy has been built on WTO rules and it is ill-equipped for a world in which might is right. It thus has common interests with trade-dependent advanced countries and with countries that rely for their development on a stable and open external environment.

Beyond the immediate response to reciprocal tariffs, the EU should be ready to lead a broad coalition to both maintain respect for the current rules and to identifying how WTO can be adapted to new challenges. A discussion at leaders’ level on giving a new impulse to multilateral institutions could be had at the . In preparation, the EU should convene a trade ministers’ meeting that brings together key G20 countries and the director general of the WTO.