The best way to tackle US higher tariffs is lower tariffs everywhere

by Gabriele Bonafede

On April 7th 2025 we witnessed the weirdest intraday swing in Wall Street. In the matter of two minutes markets went wildly from slump to growth, with a sudden increase of at least 8 percentage points. The reason? Rumours about Trump administration pausing tariffs for 90 days. Once rumours got disavowed by Trump administration, Wall Street slumped back to negative in the matter of two minutes again. The day closed with modest losses compared to the bloodbath of the previous two days.

This proved – if anything – that the recent slump in equities values is indeed caused by tariffs. Any serious economist had already predicted that. However, yesterday we witnessed the clear correlation between cause and effect even to the wide public. That is, indeed tariffs cause harm to stakeholders, companies, underlying value of shares, consumers and the economy as whole – across the world and especially for US.

Recession is still looming because Trump administration has not yet receded from its foolish and harmful trade policy. Odds of recession setting-in grow every minute, as long as tariffs are still in place.

How EU and other countries should tackle Trumpìs tariffs

The only good recipe to undo the damage caused by tariffs is undo tariffs. The best way to tackle US higher tariffs is, in fact, lowering them. This is true both for US and all other countries in the world. As the opposition to Trump’s trade policy grows within US society, economic actors and Republicans in the Congress, the rest of the World has a unique opportunity to tackle US tariffs by lowering their tariffs for all other countries in the World.

EU’s policy makers seem to be aware of that. Prominent EU economists, such as Italian former PM Mario Draghi, are all advising to implement trade deals among non-US countries everywhere. Certainly, EU will increase tariffs for US import in some sectors and products only for pure political reasons. That is, to provide evidence that in case of escalation, EU is ready to fight back.

But the real benefits are to come solely on lowering tariffs and striking deals with all non-US countries. New or better Free Trade Agreements between EU and other blocks or single countries, will benefit European and non-European economies with a better trade and economic environment, partially offsetting US self-harming trade policy. In addition, it will put EU and all other countries in better negotiating position against US.

In the cover, photo by Pau Casals on Unsplash