Trump’s Tariffs and the End of Free Trade Orthodoxy 

Trump’s tariffs mark the collapse of free trade ideology—but the EU must not respond with nostalgia or appeasement. The European Left’s Economic Advisory Board (EL Eab) outlines a bold, progressive path forward. 

On 2 April 2025, US President Donald Trump announced tariffs on all EU imports in the largest set of trade penalties since the 1930s. Although broader in scope, this new protectionism is in line with his 2018 and 2019 policies and reflects a pattern of authoritarian economic nationalism that the Left has warned against for over a decade.  

Trump’s rationale—to regain industrial capacity lost due to globalisation—reveals the disintegration of the neoliberal consensus. He aims to weaken the dollar while at the same time trying to maintain the US dollar as the world’s reserve currency, reduce capital flows to the Global South, and reconstruct a nationalist supply chain rooted in the fossil economy. This model will deepen inequality and accelerate climate breakdown.  

But the European Left has never supported the so-called “free trade” regime now being dismantled by Trump. The World Trade Organization’s model—based on global supply chains, high capital mobility, and wage repression—was unsustainable. e do not lament its passing. What we oppose is the reactionary vision rising in its place.

In response, we reject the idea that the EU should enter an industrial trade deal with Trump in exchange for tariff exemptions. His record shows that even when deals are made, they are later discarded. Appeasement will not work. We also reject the call for retaliatory tariffs without a social strategy. Such measures may harm working people without changing the structural logic of trade.  

Finally, we reject the assumption that the EU can become “competitive” in the new order by prioritising trade over transformation. “Competitiveness” itself is a concept rooted in the logic of export-led growth and wage discipline. The alternative is to restructure the economy around people and the planet. 

What Should the EU Do?

  • Shift away from an export-led growth model.
    The EU should focus on stable domestic demand and good jobs instead of endless export competition. The Green Deal and digitalisation must be aligned with this strategy.    
  • Reject financialisation and inequality-promoting reforms.
    Proposals from the Draghi report—including capital markets union, pension privatisation, and labour law deregulation—must be set aside.  
  • Guarantee jobs and protect workers.
    A European job guarantee, extension of the SURE programme, and strict social conditionality for corporate support must be prioritised. 
  • Make NGEU permanent and break with austerity.
    The NextGenerationEU programme must become a permanent fixture of EU economic governance, not a temporary exception. 
  • Fund transformative investment. 
    European public investment must focus on public services, climate resilience, reindustrialisation, and social infrastructure. 

On the Digital Front

Trump’s allies in Silicon Valley represent a serious threat to democracy and economic sovereignty. Their role in his re-election campaign and their domination of digital infrastructure highlights the need for an EU-wide public alternative.  

The EL EAB supports:  

  • Public ownership of digital infrastructure.  
  • A European sovereign technology fund .
  • Publicly owned chip manufacturing using open-source designs.
  • A public and ethical AI system governed democratically .
  • Digital sovereignty must become a core right for European citizens.  

A New Economic Framework 

This crisis should lead to a new economic paradigm:  

  • Increase the wage share in GNP.  
    Today, it is 50.5%. We aim for 70%. This will reduce dependence on exports.  
  • Ensure the ECJ upholds minimum wage directives.  
    Wage repression must no longer be the path to growth. 
  • Suspend the Stability and Growth Pact.  
    In particular, the 3% rule should not allow military spending while limiting public services.  
  • Enforce price controls and use ECB powers.  
    If Trump’s tariffs cause inflation, the ECB must act to contain prices rather than suppress wages.  

Global Solidarity 

The Global South must not be forced to bear the cost of Western trade wars. The EL EAB supports: 

  • An alternative reserve currency to the US dollar.  
  • Expansion of IMF Special Drawing Rights (SDRs) and fair distribution .
  • International trade focused on human development, not capital accumulation.

Conclusion

The European Left does not mourn the end of the free trade consensus—but it refuses to let authoritarianism shape the next global order. This is the time to push for democratic, just, and ecologically sound alternatives. A different Europe is possible—one that builds solidarity across borders and defends the needs of people and the planet.  

Skip to content