A strong reform of social public procurement that links public contracts to collective bargaining could help cancel out Trump’s tariffs and boost growth, according to estimations by UNI Europa, a European trade union federation, released today.
On 2 April 2025, US President Donald Trump shocked European leaders with 20 per cent “reciprocal” tariffs on EU exports to the United States. Since then, European leaders, policymakers, experts and trade unionists have mulled over the EU’s response. On 23 May, Trump announced a 50 per cent tariff rate, now paused again until the 9 July deadline. This makes the search for a sovereign response that props up Europe’s social and economic resilience ever more urgent.
UNI Europa’s research note estimates how linking public contracts to collective agreements in the EU’s current revision of procurement rules can strengthen the EU’s wage-led economic growth. The findings suggest that, in a moderate scenario, such a reform could help cancel out the negative effects of Trump’s 50 per cent tariffs on EU GDP. In a best-case scenario, it would even contribute to GDP growth.
- In a moderate scenario, linking public contracts to collective agreements could contribute 0.2 percentage points to growth in the European Union, cancelling out a third of the predicted negative effect of US tariffs (which ING Bank estimates at 0.6 percentage points of GDP).
- In a best-case scenario, linking public contracts to collective agreements could not just entirely cancel out the predicted negative effect of US tariffs, but add 0.6 percentage points to growth in the European Union.
Oliver Roethig, UNI Europa Regional Secretary, said: “These findings show clearly that linking public contracts to collective agreements isn’t just the right thing for workers and competition. It the right policy to develop European sovereignty in the face of geopolitical and economic turmoil. We therefore urge the Internal Market Committee in the European Parliament to follow the lead of their colleagues in the Employment Committee: only companies that respect collective bargaining should have access to taxpayers’ money.”
These findings come as the European Parliament’s Committee on Internal Market and Consumer Protection (IMCO) negotiates an own-initiative report that will inform the Parliament’s position on the Commission’s reform proposal. Earlier this month, all democratic parties in the Employment Committee adopted an opinion giving preference to companies with collective agreements in procurement.
Currently, the EU’s procurement rules incentivise procuring authorities to award contracts based on the lowest price only. At the same time, a series of legal barriers prevent more social public procurement, which would for instance mandate public contracts be awarded to companies with collective agreements. The result is a publicly funded race to the bottom for wages and working conditions that undermines competition across economic sectors.
Earlier this year, a Europe-wide survey found that a large majority of EU citizens (72%) are in favour of public procurement that strengthens workers’ livelihoods through collective bargaining, while 83% of citizens want union busters and underpaying companies to be excluded.