Europe’s Capitulation: Gros on Economic Policy Shifts

The European Union was widely criticized for agreeing to an asymmetrical trade deal with the US last summer. But in doing so, it effectively ensured that the US would continue harming itself by imposing high costs on its own businesses and consumers, while taking the economically sound step of lowering Europe’s residual tariffs.

BRUSSELS – US President Donald Trump’s “reciprocal” tariffs – first introduced last April, and changed constantly ever since – did not start a global trade war. Instead of retaliating against the United States, most of the world effectively capitulated. That response was often viewed as politically weak, nowhere more so than in Europe. But it was based on sound economics.