Cards on the table: Why the EU should negotiate Trump’s tariffs in three phases

President Donald Trump’s announcement that he was suspending his “reciprocal tariff” policy for 90 days for all countries except China was forced by the wrath of markets—but it also signals a tactical shift by Washington. The Trump administration is now seemingly shifting from building, to actively deploying, leverage: the president’s signal that the US is open for business and deal-making means, in practice, that he expects other countries to travel to Washington with a basket of goodies to placate him.

Now Washington has indicated that it would prioritise talks with the likes of Britain, India, Japan, South Korea and Vietnam over the EU. The bloc faces the prospect of watching other regions secure quick trade deals, which could put additional pressure on disadvantaged European exporters—who, in turn, might pressure the EU to cut a quick deal with the US, too.

Rule of 90

But Europe has no reason to rush. What the Trump administration has put on the table is high stakes; it extends well beyond immediate tariff relief and could reshape the global economic order as fundamentally as the Bretton Woods Agreement did in 1944.

The EU now needs a sober and coherent strategy: its game of Brussels hold’em with the Trump administration will not end within the 90-day window. Europe must also simultaneously articulate its mid-term (perhaps 90 weeks) and long-term (perhaps 90 months) transatlantic trade plan while following a clear strategy regarding how and when to deploy its cards.

The EU’s game of Brussels hold’em with the Trump administration will not end within the 90-day window. Europe must also simultaneously articulate its mid-term (perhaps 90 weeks) and long-term (perhaps 90 months) transatlantic trade plan while following a clear strategy regarding how and when to deploy its cards

By developing clearly defined objectives, utilising its strongest playing cards and acknowledging which red lines it cannot cross at each stage, the EU could remain coherent and politically united in the face of Trump’s tariff threats.

Uphill battle

While Europeans consider how to approach this three-phase negotiation framework, the EU should not assume that a deal is a logical conclusion. There are three key reasons to caution against a transatlantic deal being tenable.

1. America’s aims are murky

First, it remains unclear what the US seeks to achieve. The White House has floated too many contradictory goals: for example, where Trump prioritises using tariff leverage for quick trade deals and manufacturing investments in the US, his economic adviser Peter Navarro argues that tariffs will generate great revenue and are therefore non-negotiable.

China hawks like vice-president J.D. Vance, secretary of state Marco Rubio and secretary of the treasury Scott Bessent aim to use the tariffs to isolate China, whereas tech and financial oligarchs like Elon Musk want to protect or expand their Chinese business opportunities. Meanwhile, Council of Economic Advisors chair Stephen Miran and (to a lesser extent) Vance advocate using tariffs as leverage to reshape the global financial order and devalue the US dollar, while the national security establishment wants to maintain a strong dollar for sanctions power and prestige.

2. The EU tariff burden

Second, Europe’s tariff exposure is particularly daunting. The EU is, alongside the reciprocal tariff of 20% and the universal tariff of 10%, heavily exposed to the many sectoral tariffs—25% on steel, aluminium and automotives is confirmed, with pharmaceuticals forthcoming. These are among the largest EU exports to the US, valued at around €260bn.

Washington has indicated that these sector-specific tariffs are non-negotiable. Additional tariffs on critical minerals, and electronics and semiconductors, have already been announced; other sectors, such as chemicals, could follow. For the EU, it is a daunting prospect that only reciprocal tariffs could be negotiable by 10% or perhaps 20%, while all other tariffs stay in place.

3. Political poison pills

Third, the American political offer is—alongside its economic demands—unclear at best and predatory at worst. The US is exploring a strategic partnership with Europe’s existential rival Russia, threatening Greenland and intervening in elections. All the while, Bessent has said the administration wants to “approach China as a group” while leading economic voice Oren Cass urged Europe to join a US-led trading bloc that excludes China.

The Trump administration does not seem to believe it must make any kind of offer, for example building a deeper transatlantic market, to secure European support for this American geopolitical vision. It even adds coercive threats at any opportunity. America’s power-drunk vision (in which allies do not matter or, if they do, can simply be coerced) does not bode well for deal-making.

A phased game plan

Given the above factors, trade and technology weaponisation may well continue. Europeans must prepare for a world in which they cannot bargain away the problems with the US and instead retaliate decisively, redirecting their resources towards fiscal expansion, single-market integration and trade diversification.

But Europe must likewise prepare for a scenario in which negotiations will yield some results. Here, Europe requires a phased strategy which is clear, conditional and incremental. It should move cautiously and conditionally between phases, ensuring that each step forward solidifies the EU’s negotiating position and safeguards its economic and national security interests.

Short-term (90 days)

Europe’s immediate priority must be the elimination of reciprocal tariffs and the obtaining of meaningful exemptions from the sectoral tariffs. US demands in which Europeans are forced to invest in the US to export back to the EU must be avoided. The EU must continue to demonstrate a credible readiness for swift retaliation if talks fail, including by preparing the grounds for the anti-coercion instrument which would target US services exports.

Mid-term (90 weeks)

Only if a satisfactory short-term agreement is achieved should the EU consider offering deeper cooperation on shared concerns over China’s economic practices and security threats. The EU has made numerous offers to focus a transatlantic bargain on China, but parts of the Trump administration have indicated their disinterest in linking China to the tariff negotiations.

Pushing China-specific issues into the mid-term phase should also be in the EU interest. However, though Europe also needs to urgently tackle its own massive China challenge and be vigilant about how US-China decoupling will affect the single market, it should not help to pre-emptively enable the China agenda of the Trump administration—especially if the latter is unwilling to accommodate core EU trade interests.

Long-term (90 months)

If the EU establishes sufficient alignment on tackling China-related risks, it should proactively shape discussions on global financial and trade rebalancing. Though Trump may not have the stamina and coherence to advance a more structural rebalancing of international trade and finance, his possible successor J.D. Vance might. The EU must prepare its homework for such an agenda to be able to push for a multilateral conversation supporting its interests.

Setting out the strategy

EU unity over its tariff response has so far been solid, but the risk of incoherence looms. Europe, therefore, needs to politically invest in its common position over the coming months and years.

The first step should be to convene a special European Council meeting (as soon as the new German government begins) to hammer out a unified negotiation strategy covering all three phases sketched in this commentary. This must not be a rigid blueprint, but rather outline broad landing zones and interests Europe can identify for itself.

There is no return to the previous state of affairs regarding the transatlantic relationship and the global economy at large. European leaders need to avoid reheating platitudes about free trade and the rules-based trade order. But if Europeans want to save some of these elements, they must formulate clearly which they are willing to be transactional about—and which they are not.