Bruegel Chief Warns EU Must Speak With One Voice as US-China Trade Tensions Rise

What Bruegel's Guntram Wolff Says About EU Trade, Tariffs and Taxation

In an interview with Forbes Austria, Guntram Wolff, director of the Brussels-based think tank Bruegel, warns that Europe is facing trade pressure from two directions at once: a US administration that is undermining the multilateral system and a Chinese economy whose state-led model makes fair market access difficult. He stresses that the truce struck between US President Donald Trump and European Commission President Jean-Claude Juncker has only temporarily removed the threat of bilateral tariffs; the issue could return to the agenda very soon.

Wolff argues that a rules-based system centred on the World Trade Organization protects smaller players such as Europe, because it gives them confidence that rules will be enforced. The EU-Japan free-trade agreement, now being ratified, shows Europe's capacity to set international rules: he notes the pact will cover around one-third of world economic output.

On taxation, he says current trade talks focus mainly on goods and some services, but the digital sector matters too. He supports a European digital tax that makes American online platforms pay tax on profits generated in Europe, while warning it must be designed so other countries do not use it as a pretext to tax European firms.

Finally, he identifies three investment priorities for the EU: credible European players in critical infrastructure such as 5G, a less fragmented internal market, and a stronger education system with more top universities.

Where Wolff Sees Europe's Real Leverage and Its Gaps

Wolff's core claim is that Europe's economy and trade flows are comparable in size to those of the US and China, and its rule-setting ability is demonstrated by the EU-Japan agreement. That is an argument against the idea that Europe must inevitably align with one superpower. It rests on a condition: member states must first discuss and coordinate differences, then let the EU Trade Commissioner act as a single voice. The Trump-Juncker deal is presented as evidence that this coordination works.

The risk is that the US-China relationship is not a normal trade dispute but a struggle for geopolitical primacy. Wolff says European companies can be harmed by the escalation, and if the conflict is ultimately about which power remains strongest, Europe risks being run over and forced to align economically with the United States.

The Digital Tax Trade-Off

Wolff supports the digital tax because much of the value generated by US online firms is produced in Europe even when it is listed as exports. But he explicitly conditions support on a design that prevents other countries from using the tax as a precedent to tax European corporate profits. If that condition fails, he warns of a sector-spanning tax race that could harm European companies.

Three Gaps Europe Must Close

He names three concrete weaknesses. First, Europe lacks globally credible players in critical digital infrastructure; he does not support excluding foreign companies from 5G competition, but says European firms need more innovation support and higher R&D spending, and broadband remains underdeveloped. Second, the internal market is still fragmented, especially in services, where differing regulations and standards — such as for health products — make intra-EU goods transport expensive. Third, there are not enough European top universities and some countries have serious school-level deficits.

What EU Leaders and Exporters Should Do Next

For policy makers and businesses exposed to transatlantic and intra-EU trade, the interview points to four specific response areas.

• Plan for the US tariff truce to end. Wolff says the topic could return very soon; exporters should have scenario-based sourcing alternatives for goods covered by current US tariff threats.
• Use the EU-Japan agreement early. Because the pact covers around one-third of global output, importers and exporters should prepare proof-of-origin and product coverage reviews as ratification completes.
• Shape the digital tax design, not just the headline rate. The proposal should explicitly avoid giving other countries a template for taxing European firms; EU and OECD-level coordination is the safeguard Wolff names against a multi-sector tax race.
• Direct EU investment to the gaps Wolff identifies. Public funding should prioritise R&D support for European 5G players, cross-border services standardisation, broadband and university/school spending.