The United States’ latest tariffs on Europe and Mexico demand a bold European response to reshape the global order.
The announcement on 12th July 2025 by Donald Trump of 30 percent tariffs on imports from the European Union and Mexico to the United States represents the latest in a series of aggressive measures. This policy is not merely a tactical manoeuvre; it is a calculated effort to foster international disorder – what scholars of the world system have long termed “systemic chaos”. In this new paradigm, those who strike first and hardest gain the upper hand, regardless of the long-term consequences for alliances such as NATO, global trade, or America’s ability to attract international talent. The era of American hegemony, it appears, is over, and diplomatic niceties will not resurrect it.
This strategy of disorder is intrinsically linked to a resurgence of conflict. Recent months have seen the bombing of Iran, unequivocal support for Israel’s conflicts, and the ongoing war in Ukraine. Domestically, the United States is pursuing a significant nuclear and conventional rearmament programme outlined in its new federal budget. Towards Europe, there is an insistent demand for NATO members to spend five percent of their GDP on defence, largely to procure American weaponry, such as US F-35 nuclear-capable fighter jets. Europe is also expected to fund the Patriot missiles that the US will supply to Ukraine.
These actions yield tangible benefits for the United States. In 2024, foreign arms sales reached $318.7 billion, with the conflict in Ukraine contributing to a 233 percent increase in sales to Europe between 2015-2019 and 2020-2024. The US now commands 43 percent of global arms exports, according to SIPRI data. On the trade front, new tariffs generated $100 billion for the federal government in June, accounting for five percent of all tax revenues and seemingly eliminating the US trade deficit. However, such measures alone cannot fundamentally revitalise the American economy.
How should Europe react to this confrontational approach from Washington? The prevailing debate in Brussels, centred on retaliatory tariffs or renewed negotiations, fails to grasp the true nature of this clash. The White House’s aggressive posture demands a strategic response that targets the US where it is most vulnerable: not on consumer goods like whisky or Levi’s jeans, but on its financial sector, and in digital and green technologies. Concrete proposals are already on the diplomatic table: taxing US service exports to Europe, compelling US digital platforms to pay European taxes, and enforcing European regulations as international standards for digital activities, data protection, artificial intelligence, and the green transition.
The challenge lies in the political culture of current European leaders. Figures such as Ursula von der Leyen at the Commission, Kaja Kallas in EU foreign policy, Roberta Metsola at the European Parliament, and Mark Rutte at NATO have long championed austerity-driven neoliberalism before adopting hawkish stances against Russia. In both instances, their positions have reflected an unwavering deference to US power. Consequently, their instinctive reaction today is to justify and mediate with Washington, even in the face of direct affronts. A similar dynamic, albeit with varying national electoral nuances and the rising tide of right-wing populism, affects the leaders of major EU countries.
A notable exception is Spain’s socialist Prime Minister, Pedro Sánchez. He has openly rejected the American diktat on military spending, halted arms sales to Israel, declaring that “our government does not trade with a genocidal state,” and conducted state visits to China and Vietnam in April. These common-sense initiatives have, regrettably, received limited support from European social democrats and centre-left forces, let alone the Green parties. Yet, they offer a potential foundation for re-imagining European politics.
A Europe that truly lives up to its historical legacy could leverage this period of American-induced disorder to rewrite international rules, aligning them with its own interests and values. This could involve closing tax havens in Ireland, Luxembourg, and the Netherlands for US multinationals, restricting capital movements to the United States, and imposing limitations on the activities of US financial companies that dominate European economies through private equity funds. Cracks in American finance are already evident, with stock market unrest and a flight from the dollar. Since the beginning of the year, the dollar has depreciated by ten percent against major currencies – a slide not seen since 1973, when the dollar abandoned its gold parity and the world monetary system was fundamentally restructured. Finance and the dollar, alongside military might, remain central to American power, and these are the areas that Europe, and indeed the world, must now decisively challenge.
Ultimately, this requires political will. Why not convene an EU-China-BRICS summit in Brussels to explore new trade opportunities for all parties, and begin to reconstruct an international order that serves the global community, rather than merely accommodating the bullying tactics of the White House?
Mario Pianta is Professor of Economics at the Scuola Normale Superiore in Florence.