This week, key leaders from across the European Union will gather for a meeting of the EU Competitiveness Council. Top priorities on the agenda include strengthening the single market, reducing bureaucratic obstacles, and preparing for the EU presidency transition from Poland to Denmark.
This presidency handover is the first since the tumultuous inauguration of former U.S. President Donald Trump, a period marked by escalating trade tensions and protectionist rhetoric. The EU now has a strategic moment to reassert itself as a global champion of open trade. That may require confronting its own internal contradictions.
Trump’s trade policies positioned the U.S. as a victim of global exploitation, casting allies like the EU as culprits. While Brussels has pushed back—both rhetorically and through targeted responses—it has yet to replicate the UK’s success in negotiating tariff relief for critical sectors such as steel and automobiles.
But the EU’s biggest trade barriers aren’t just across the Atlantic—they’re homegrown. Many of the obstacles stifling business investment and innovation within Europe were in place well before Trump entered office. A recent analysis by London School of Economics professor Luis Garicano, published on Silicon Continent, casts a critical light on the limitations of the EU’s single market.
Garicano argues that mutual recognition within the EU has failed, resulting in restrictive regulatory barriers that prevent seamless cross-border trade. The IMF estimates these internal hurdles carry a hidden cost equivalent to a 45% tariff on goods. For services, the burden climbs to 110%—a figure higher than Trump’s now-infamous tariffs on Chinese imports.
Although the European Commission has acknowledged the issue, tangible progress in easing these constraints remains limited. Rather than eliminating excessive bureaucracy, recent initiatives—including the AI Act, the Green Deal, and revisions to the Tobacco Excise Directive—have added to the regulatory load. Businesses need clarity and predictability, not more red tape. Europe can no longer afford policy paralysis.
This week’s council meeting will help shape the EU’s economic strategy for the months ahead—particularly as Denmark prepares to assume the presidency. Danish officials must resist the temptation to chase flashy new projects or expand Brussels’ influence. Instead, they should refocus on simplifying the regulatory landscape and dismantling barriers within the single market.
For critical sectors like agriculture and tobacco, long-term investment has become nearly impossible amid erratic policymaking. Uncertainty around future regulation is deterring decision-makers and undermining confidence in the European market. The resulting stagnation means fewer job opportunities, limited consumer choice, and slower economic growth.
Even in external affairs, Brussels is dragging its feet. It recently inked a simplistic post-Brexit trade agreement with the UK on food and fishing regulations—yet many key details remain unresolved. In an era demanding agility, the EU cannot afford to move at a glacial pace. As it lays the groundwork for Denmark’s presidency in the second half of 2025, the bloc should avoid sweeping new regulatory campaigns and focus on pragmatic reforms.
This “less is more” approach is ironically the least resistant path. The EU has burdened itself with mountains of complex rules. Rather than introducing more, it should dedicate resources to clearing out what already exists. There are real opportunities to ease trade and growth—if policymakers are willing to act.
For example, the EU could promote public health and innovation by revisiting the Tobacco Excise Directive, potentially lowering taxes on vaping and alternative nicotine products and reversing bans on nicotine pouches. It could also embrace deregulation in nuclear energy, paving the way for a clean energy renaissance. Furthermore, the EU could scale back its inclination to impose massive fines on tech giants through the Digital Markets Act, which some critics argue hampers competitiveness and risks ceding the global tech race to rivals like China.
As Trump’s policies reshape the U.S. economy, the world is looking for leadership elsewhere. The EU has an opening to lead by example—championing open markets, cutting through bureaucracy, and enabling business dynamism. The time to act is now.
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