The coming vote for Europe’s soul

[PARIS] When US President Donald Trump unveiled his famous “reciprocal tariff” scorecard in April 2025, most of the commentary focused on the sheer scale of the levies that he was imposing on the rest of the world.

But, more shocking was the extent to which the tariffs discriminated by country – a flagrant violation of the very first article of the General Agreement on Tariffs and Trade (Gatt), the precursor to the World Trade Organization (WTO).

It is this principle – now enshrined in the WTO’s most-favoured-nation clause – that underpins the entire global trading system, and it must guide European lawmakers in the coming weeks, when they decide whether to ratify the trade agreement reached between Trump and European Commission President Ursula von der Leyen in 2025.

Non-discrimination was embodied in the very first article of the Gatt for a reason. It reflected the painful lessons that policymakers had learnt from two world wars, and the tension-filled decades between them.

When different tariffs are levied on similar goods originating in different countries, the ensuing price differences can significantly distort international trade patterns.

Trade flows end up being redirected from their natural routes, which reflect underlying patterns of comparative advantage, towards pathways created by politicians to favour some party at the expense of others.

Such behaviour naturally creates resentment.

As the economist Jacob Viner (who taught Milton Friedman at the University of Chicago) wrote back in 1924: “It was precisely to bring about equality of treatment and to eliminate the economic disadvantages, the ill-feeling and the diplomatic bickering resulting from such discriminations that the use of the most-favoured-nation clause became common.”

The Great Depression and trade protectionism of the ensuing 15 years underscored the political danger to which Viner had alluded.

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The European empires adopted discriminatory tariff and quota policies to foster intra-imperial trade, and reduce imports from outside their respective trade blocs.

Recent research, using modern empirical techniques and commodity-level data on trade and trade policy, shows that they succeeded in this aim.

For example, in the 1930s, the British Empire increased its share of UK imports by a little over 10 percentage points, with roughly two-thirds of the increase directly attributable to discriminatory British tariffs, or “imperial preference”.

Meanwhile, retaliation against the 1930 US Smoot-Hawley tariff may have cut US exports to affected markets by as much as 30 per cent. Countries such as Japan found themselves systematically discriminated against in key markets around the world.

The decline of multilateralism and the rise of trade within geopolitically defined blocs raised doubts among countries without privileged access, about whether they would be able to secure the raw materials they needed.

None of this was conducive to international harmony.

After US president Franklin Delano Roosevelt came to power, his secretary of state, Cordell Hull, pointed to World War I as a warning about how protectionism and discrimination can create the kind of “economic dissatisfaction that breeds war”.

That is why the US insisted, in 1941, that the Atlantic Charter include a post-war commitment.

It was to promote “the enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity”.

It is why the non-discrimination principle in Article 1 of the Gatt has been at the heart of international trade law ever since. And, it is why the current retreat from the principle is more dangerous than many seem to realise.

Who can doubt that discriminatory US tariffs have led to precisely the sort of ill-feeling and diplomatic bickering that Viner described?

It is clear that Trump is unwilling to accept any constraints on his exercise of power, even though the US Supreme Court has struck down the legal basis for his Liberation Day tariffs.

And it is equally clear that the Trump administration will continue to cherry-pick those bits of international trade law that serve its own political purposes – such as the protections provided to US intellectual-property rights – while ignoring those that do not.

What is more surprising is that the EU is collaborating with Trump’s effort to destroy the legal framework that has governed international trade since the 1940s.

By eliminating tariffs on certain US exports to the EU in exchange for a US tariff cap of “only” 15 per cent on EU exports, the EU is reneging on its own most-favoured-nation obligation to other WTO members.

The European Commission has been keen to remind everyone that “a deal is a deal, and the EU honours its commitments”.

Yet, it is the EU that is now breaking the most fundamental international trade deal of all – hardly evidence that the bloc is serious about playing a constructive role at the heart of a group of like-minded countries that remain committed to international law.

The upcoming vote on the US-EU trade framework offers an opportunity for the European Parliament to stand up for the principles that Europeans profess.

The opportunity costs of rejecting the deal are a fraction of what they seemed to be a year ago.

The costs of not doing so – the blow to Europe’s standing in the world, and to Europeans’ own understanding of who we are and the European project’s purpose – would be enormous. PROJECT SYNDICATE

The writer is director of research at the Centre National de la Recherche Scientifique (French National Centre for Scientific Research) and professor of economics at Sciences Po