BRUSSELS—President-elect Donald Trump’s tariff warnings are forcing Europe to confront an unwanted trade-off: Keep its own tariffs low and shoulder the economic costs, or throw up new barriers in a bid to protect vulnerable industries.

The European Union and Mexico revived a stalled free trade agreement on Friday, days before the return to the White House of Donald Trump, who has threatened both sides with tariffs.

The EU and Mexico have agreed a long-delayed trade deal as they seek to reduce their reliance on the US days ahead of Donald Trump’s return to the White House. After nine years

Mexico and the European Union are announcing a revamped agreement that they said would boost trade and investment, amid Trump's tariff threats.

The European Union and Mexico took action before President-elect Donald Trump—who has threatened both regions with steep tariffs on exports—takes office.