Trump’s tariff war forces allies to choose resistance or surrender

President Trump’s trade war is forcing America’s closest allies to choose between fighting back, or acquiescing. The trouble is, nobody has figured out which is the best way to get Trump to do what they want.

The European Union and Canada have led the charge against Trump’s tariffs, threatening their own duties on tens of billions of dollars of American goods after the U.S. leveled blanket tariffs on steel and aluminum, and on imports in North America. Officials in both regions have calculated there is value in showing strength.

“Of course, we have to retaliate,” said Anna Cavazzini, a member of the European Parliament from Germany. She said the European Commission wants a deal, but: “We also have to show our teeth because it’s the only language that this Trump administration is basically understanding.”

On the other side are the U.K. and Mexico, among others, which have decided to hold fire in hopes of striking a deal. Some countries are also loath to disrupt their security alliances with the U.S., which are viewed as increasingly fragile under Trump.

“Who is going to do better: the people that poke the bear in the eye, or those who wait for the people who are poking to be eaten first?” said Barry Appleton, an international trade lawyer and co-director of the New York Law School’s Center for International Law.

The decision is going to be even more tricky on April 2, when the Trump administration plans to move forward with a list of so-called reciprocal tariffs that aim to match the duties and nontariff trade barriers that other countries impose on American products, an act that would rewire global trade. Trump has called it “Liberation Day.”

The EU threatened tariffs on American goods in response to the Trump administration’s tariffs on all steel and aluminum imports.

So far, choosing between retaliation and compliance hasn’t mattered at all for Canada and Mexico, which have used different tactics—Canada being more aggressive with retaliation and Mexico taking a firm but cooperative approach. Both countries were still slapped with a 25% duty on many of their exports in March.

Trump suggested the tariff policies were evolving, adding to the confusion. “I may give a lot of countries breaks,” he said Monday. “We might be even nicer than that.”

The U.S. so far has put 25% duties on many products from Canada and Mexico, citing concerns about border security and upending the three countries’ free-trade agreement. On March 12, Trump levied 25% tariffs on global imports of steel and aluminum, citing a need to protect domestic industries. China already faced steep tariffs in the U.S., and Trump raised them even higher over the past two months.

Among the governments that have pushed back, Canada, China and the EU feel they have enough leverage to hurt the U.S. economy.

Canada, the EU and China are among the top importers of U.S. goods—and Canada is a major supplier of energy to the U.S. The size of the EU’s market, which includes 27 member states, means that tariffs it imposes on U.S. products will have a noticeable impact for U.S. companies, said officials.

In Canada, there is the added element of Trump’s stated desire to make the country the 51st state, a proposition that Canadian leaders first saw as a joke but now view as a serious threat. Adding to the fervor to strike back: Canada is in the midst of a national election that revolves around which political party is best positioned to manage Trump.

“I think you have to hit back. I don’t think Trump respects rolling over,” said David MacNaughton, a former Canadian ambassador to the U.S.

But when countries fight back, Trump has struck back much harder.

Earlier this month, Canada’s Doug Ford, leader of the province of Ontario, said he would punish the U.S. for tariffs by slapping a 25% export tax on electricity that goes to 1.5 million American homes. Two days later, the EU also threatened to hit the U.S. for its tariffs on steel and aluminum, unveiling duties of up to 50% on whiskey, motorcycles and motorboats, among other American products.

Ontario Premier Doug Ford said he would place a 25% export tax on electricity that goes to 1.5 million American homes in response to U.S. tariffs.

Then Trump threatened to double the 25% steel and aluminum tariffs on Canada and slam the EU with a 200% duty on Champagne and other alcoholic products. Canada and the EU tapped the brakes, showing the limits of an aggressive retaliatory strategy.

Canadian Prime Minister Mark Carney last week noted that Canada’s economy is much smaller than the U.S.’s and there is only so much it can do to punch back.

“There is a limit to matching these tariffs dollar for dollar given that our economy is one-tenth the size of the United States,” he said.

The EU has also recently shown signs of softening. A first tranche of countertariffs was set to take effect on April 1, but the bloc said last week that it would delay them to mid-April to allow more time for internal consultations and negotiations with the U.S.

EU Trade Commissioner Maros Sefcovic met Tuesday with U.S. officials in Washington for what he said were substantive talks. “The EU’s priority is a fair, balanced deal instead of unjustified tariffs,” he wrote on X.

China’s retaliatory measures—new tariffs on U.S. agriculture and livestock, a World Trade Organization lawsuit, and probing U.S. firms for potentially “dumping” fiber-optic products—are seen as muted and symbolic. Analysts say it is likely looking for leverage to make a deal.

Others with less leverage have decided to swallow tariffs in the short term, gambling that it is safer to stay in Trump’s good graces.

Mexico, which sends almost 80% of its exports to the U.S., has sent a stream of officials to Washington for talks with U.S. counterparts. Meanwhile President Claudia Sheinbaum has tried to create a respectful, but forceful dynamic with Trump on their phone calls, said people familiar with the phone conversations.

Hoping to address Trump’s concerns about drugs and migrants flowing over the border, Mexico in February transferred 29 imprisoned drug kingpins to the U.S. In a recent call, Sheinbaum shared a chart with Trump titled “Look at the Results!” that highlighted a sharp drop in drug seizures with statistics from U.S. Customs and Border Protection.

Trump has expressed admiration for Sheinbaum but hasn’t given Mexico a break. If Trump proceeds with new tariffs on Mexican goods, the damage to bilateral cooperation will be significant, said one Mexican official.

“How do you maintain cooperation if this wrecks your economy?” the official asked. “Politically, it’s not sustainable to be close to an administration that hits you with a recession.”

In the U.K., Prime Minister Keir Starmer is looking to act as a bridge between the U.S. and Europe on issues such as defense and the peace in Ukraine. Not entering into a trade dispute with the U.S. administration is an important plank of that strategy.

Britain is also eager to sign a trade deal with the U.S., and has been on a charm offensive to woo Trump. During a White House visit last month, Starmer delivered to Trump a handwritten invitation from King Charles for a state visit.

“The prime minister and I have gotten off to an outstanding start,” Trump later said.

Write to Vipal Monga at vipal.monga@wsj.com, Kim Mackrael at kim.mackrael@wsj.com and Santiago Pérez at santiago.perez@wsj.com