Europe does not need new trade weapons – it needs to pull the trigger

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Every month, Germany alone loses some 10,000 industrial jobs - roughly the equivalent of the workforce of a mid-sized factory town disappearing from the economy every four weeks. Deindustrialisation is no longer a forecast: it is an unfolding reality. Much of the damage is self-inflicted - high energy costs, inadequate infrastructure and overregulation have steadily eroded competitiveness, and reversing this trend will take years. But two external shocks are now accelerating the decline: a flood of Chinese state-subsidised exports and Donald Trump's unpredictable tariff policy. Europe cannot rebuild its competitiveness overnight. But it must insulate itself from these external shocks if its efforts to repair the foundations of its economy are to have any chance of success. And it has no time to lose.

Europe's reflex is to take trade disputes to the World Trade Organization (WTO). That door is now largely shut. Washington has paralysed the WTO's appellate body and can 'appeal into the void' - lodging an appeal that no functioning tribunal can hear, rendering any adverse ruling unenforceable. The EU's interim dispute-settlement mechanism for cases involving China is too slow and cumbersome to respond to a systemic crisis. Europe should not break the rules on which it depends. But it must learn to defend itself more quickly while upholding them by making it easier to trigger trade defence mechanisms and allowing more discretion in how cases are handled.

The goal: leverage and deterrence

In June the European Council gave the Commission a broad mandate to make more assertive use of existing trade defence instruments and to design new ones. Some Member States fear retaliation and dread an escalating trade war, leaving Europe trapped in a psychology of weakness. To escape this trap, Europe needs a toolbox that serves two purposes. First, it must deter Washington and Beijing from acting against European interests by making the prospect of swift countermeasures credible. Second, when deterrence fails, it must give Brussels enough bargaining power to end trade conflicts before they inflict lasting damage on jobs and investment.

Europe holds more cards than it plays. China's growth leans on exports more than ever, which makes access to the single market indispensable to Beijing. China wants to avoid economic tensions, but right now Beijing does not think it has much to lose in confronting Europe. Only last week, in an attempt to ease tensions, Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentaoagreed to establish a new ministerial-level platform to discuss trade and investment rebalancing, export controls, intellectual property rights and WTO reform. Such procedural agreements are positive, but not breakthroughs in themselves. Europe needs to resolve trade disputes with China through negotiations. But for this, it has to be in a better negotiating position.

Washington, too, respects strength: President Trump retreated from his own tariff war once China hit back, and blinked when Europe brandished its Anti-Coercion Instrument over Greenland. The instruments of pressure exist; what is missing is the will to use them.

Safeguards: Europe's emergency brake

The fastest lawful response is a safeguard, which is a WTO-compliant trade defence instrument. It requires no proof that anyone cheated; the EU need only show that a sudden, unforeseen surge of imports is seriously harming its producers. This makes safeguards much quicker to deploy than Europe's plodding anti-dumping procedures, while allowing a whole sector - machinery, aluminium products or chemicals - to be protected at once.

Safeguards are more flexible than they appear: although they apply to imports of all origins, the EU can exempt its free-trade partners if imports from the remaining exporting countries alone are doing the harm. Brussels gains leverage as it can negotiate quotas and phase-outs. 'Transhipment' remains a risk, however, as targeted exports can be rerouted through third countries to Europe, reducing the effectiveness of the measures.

Safeguards only buy time - eight years at most according to WTO law - and that time is wasted unless European industry uses it to become competitive. The economic relief that safeguards provide for European industry should carry strings: companies should use the time they are afforded to invest in research and innovation. At the same time, Member States and the EU need to improve the conditions for competitiveness, for example through deregulation. To maintain pressure for reform, the EU should not renew the safeguards after the initial four-year period when they expire under WTO law unless governments and firms deliver.

No shortcuts: do not copy America

Against Washington, safeguards are the wrong instrument: they are designed to address sustained import surges, whereas the American challenge takes the form of sudden, coercive tariffs. Brussels is therefore considering a new tool mirroring the sweeping powers that US trade law gives the president under the well-known Sections 201, 232 and 301. But what sets American tools apart is not so much their legal power as the fact that President Trump is using them unilaterally and in disregard of WTO rules. That is neither a path Europe can follow nor one that it should seek to emulate. On paper, US instruments are hardly any sharper than Europe's. The combination of the EU's Safeguard Regulation, its Enforcement Regulation and newer tools such as the Foreign Subsidies Regulation, the International Procurement Instrument and, above all, the Anti-Coercion Instrument roughly match the legal powers of the US. It is therefore far from clear what a proposed new 'overcapacity instrument' would add.

The real fix: reform, not invention

On paper, Europe's toolkit is impressive: the problem is not capability but credibility. Two structural gaps undermine deterrence: an 'activation gap', because decisions require a qualified majority among 27 Member States, and a 'discretion gap', because EU law tightly constrains how, against whom and for how long measures may be applied. By contrast, the US president enjoys far greater latitude to impose and adjust tariffs - partly because US laws grants such powers, and partly because President Trump ignores the law.

The game-changer is not a new weapon. What the EU needs is to make sharper use of the ones it already has at its disposal. To close the activation gap, Europe should take four steps that will accelerate its response. First, it should expand the continuous import-monitoring it introduced in April 2025 and explore whether WTO rules allow safeguard duties to be applied retroactively. Second, the EU should allow rapid provisional duties, to be refunded if a case collapses. Third and most importantly, the EU should flip the voting rule so that trade defence measures take effect unless a qualified majority decides otherwise, shifting the default from paralysis to action. Fourth, it should establish a solidarity mechanism to share the cost of retaliation, ensuring that no Member State can be singled out because of its particular exposure.

To close the discretion gap, the EU needs trade defence measures that operate more like dials than switches - easing automatically as the other side changes its behaviour, for example by reducing subsidies or opening its markets. This would allow Europe to negotiate from a strong bargaining position ('change your policies and the pressure will ease'). It should also stop tying its own hands: under the 'lesser-duty rule' the EU caps its tariffs below the level permitted by WTO rules. The EU should make broader use of its discretion to waive the lesser-duty rule even more regularly than it has done in recent years. Finally, it can build in automatic escalation powers so that the Commission can respond to counter-retaliation without having to return to the Council at every step, thereby increasing the predictability of Europe's response in the eyes of adversaries. This should be implemented through the Anti-Coercion Instrument.

Europe's problem was never a shortage of weapons. It is time to use them before deindustrialisation becomes irreversible.

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