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An Alliance for Open Trade: How to Counter Trump's Tariffs

with Keith Head, Isabelle Méjean, Emanuel Ornelas and Moritz Schularick. Kiel Policy Brief, No. 194. July 2025.

The Trump administration’s tariffs hit traditional trading partners including the EU, Canada, Mexico, Brazil, and South Korea. Unilateral retaliation by individual countries is unlikely to be effective against an economy of the size of the United States.

The brief proposes that affected nations instead form a strategic coalition — an alliance for open trade — that implements WTO-compliant counter-tariffs targeting politically sensitive U.S. sectors such as automobiles, pharmaceuticals, and agriculture. Rather than framing the response as punitive, the coalition should position it as a defense of the rules-based international trade order. Prompt coordinated action is essential to prevent further erosion of the global trading system.

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