Europe could be at center stage as the Trump administration’s tariffs upend the global trading system, slashing Chinese imports to the U.S., a report from the McKinsey Global Institute finds. President Trump’s aggressive trade policy has sparked concerns about a recession and a painful unwinding of the globalization of recent decades that had expanded profit margins and kept prices low.

European Union leaders are set to debate their strategy in response to President Donald Trump’s trade war, with the likely choices coming down to accepting an unbalanced deal or risking escalation by striking back.

President Donald Trump said on Tuesday he was not thinking of extending the July 9 deadline for countries to negotiate trade deals with the U.S., and continued to express doubt that an agreement could be reached with Japan.