Roughly six months after US President Donald Trump shook the foundations of global trade with his tariff announcements, the International Monetary Fund offered some positive news at its recent annual meeting. The trade dispute has so far hurt the world economy far less than feared, and its impact on inflation also appears to be smaller than expected.

Two lessons can be drawn from the conflict. First, Trump’s policies face fundamental rejection, especially in Europe – unsurprising, given how rapidly he undermines democratic processes in the United States, and how strongly his economic agenda contradicts established research. His politics polarise and provoke emotions, something that was evident in several podium discussions at the Washington meetings. Yet amid all justified criticism, it is worth occasionally pausing and taking a more dispassionate look at US policy. Some issues, viewed more calmly, turn out to be less severe than initially feared.

Although tariffs may have had a smaller than expected impact on global growth, they remain harmful nonetheless – especially to the United States itself. Globalisation has many dark sides, such as environmental damage or risky interdependencies between states. But it remains the foundation of global prosperity – not only in industrialised nations but also in emerging and developing economies. The trend toward protectionism is therefore misguided. The United States serves as a negative example, not only because of its tariffs. The IMF recently cut its estimate of the country’s potential growth rate due to restrictive immigration policies. Without foreign workers, the US is leaving prosperity on the table.

At the IMF meetings, German Finance Minister Lars Klingbeil stressed that Germany intends to pursue a different path. While many countries are turning inward, Germany aims to strengthen international cooperation. Yet neither Germany nor the European Union can claim top marks. In cross-border collaboration, the EU’s member states still have substantial room for improvement. Each year, when policymakers and finance executives gather in Washington, completing the single market and the banking union is a recurring topic – but little tangible progress has been made.

Europe’s internal trade barriers, arising from divergent national regulations, weigh on the eurozone economy more heavily than US tariffs do. According to IMF analysis, these barriers act like a domestic tariff of 44% on goods and a striking 110% on services. Considering that EU members trade more with one another than with the rest of the world combined, the resulting loss of prosperity is all the more significant.

If Europe wants to close the growth gap with other major economies, it must intensify cross-border cooperation – which still too often fails due to member-state protectionism. Without progress on a banking, savings, and investment union, most promising European start-ups will continue to seek capital in the United States.

Another area rarely in the spotlight but equally crucial is energy integration. High energy prices continue to burden European industry, particularly in Germany. Completing a single energy market would not only strengthen supply security but also help lower prices, as production would shift to wherever energy can be generated most cheaply. If Europe finally makes real progress in deepening cooperation, the IMF’s growth forecasts may once again become decidedly more optimistic.