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USA-EU conflict over Greenland
The EU is taking action now “Trade Bazooka”?
In the escalating dispute between the EU and the USA over Greenland, a trade policy instrument that has never been used before is coming into focus. Is the EU now bringing out the “trade bazooka”?
The dispute between the European Union (EU) and the USA over Greenland continues to escalate. The EU states are feverishly discussing a clear response to US President Donald Trump’s tariff threats.
The focus is on a trade policy instrument that was previously primarily intended as a deterrent: the so-called trade bazooka.
“Trade Bazooka” has never been used
This refers to the Anti-Coercion Instrument (ACI), i.e. the “anti-coercion instrument” – a powerful trade policy tool with which the European Union can react to economic coercion from non-EU states.
The ACI came into force on December 27, 2023 and has never been applied. Originally it was aimed more at countries like China – not close partners and allies like the United States of America.
Countermeasures against “blackmail state”
The ACI allows Brussels to take various countermeasures if a third country uses trade restrictions to pressure the EU or individual member states to make a particular political decision. Such practices are considered “undue influence on the sovereign freedom of choice” of the EU and its member states.
The ACI therefore offers the EU a legal framework for trade policy measures in order to take targeted action against the “blackmailer state”. She can gradually increase the pressure.
Counter tariffs on US imports and Export controls
As part of the ACI, the EU could impose counter tariffs on US imports, restrict US companies’ access to the European internal market, exclude US companies from public EU contracts and introduce export controls or restrictions on key industries and services.
Selective taxation of companies is also conceivable. “The EU could, for example, target the big tech companies,” emphasizes Commerzbank economist Vincent Stamer.
The timeline for ACI actions
What is crucial is that these response measures are only available to the EU as a last resort – but they can be deployed quickly if necessary. They must be proportionate, targeted and limited in time.
The regulation gives the European Commission a maximum of four months to investigate a possible case of economic coercion. The EU Council then decides on the basis of this report – it has eight to ten weeks to do so.
No unanimity required in the EU Council
To activate the ACI countermeasures, only a qualified majority is required in the EU Council. Unanimity is therefore not required – a central point of the instrument. The aim was to avoid blockades by individual member states and to enable the EU to act.
In addition, cooperation with other affected countries as well as with like-minded partners and allies is also possible within the framework of the ACI. All of this makes the “trade bazooka” a versatile and potentially extremely effective instrument, which European diplomats sometimes refer to as a “nuclear option” in the trade dispute.
France for “bazooka”, other countries hesitate
But will it really be used now? In any case, the debate about this has fully flared up in the EU. French President Emmanuel Macron is one of the most vocal supporters of the ACI. He argues that it is intended precisely for situations like Trump’s current tariff threats in the Greenland dispute.
But not all EU states are likely to be ready to act immediately. Because Trump’s new tariff threats do not affect all EU member states. “Countries like Italy have no economic incentive to reignite the trade dispute,” emphasizes Commerzbank economist Stamer. “That should make it difficult to activate the ACI.”
Irish Prime Minister Micheál Martin made cautious comments. It is “too early” to use the ACI now. Instead, a dialogue with the USA must first be held.
A new front in the customs dispute with the USA?
The EU’s “trade bazooka” is still a long way from its first deployment. But the fact that leading EU politicians are now seriously discussing the use of this powerful trade policy instrument for the first time shows how tense the situation is – and how much the geopolitical coordinates have shifted under Trump’s second presidency.
If the EU actually resorts to the “trade bazooka,” it would open a new, unprecedented front in the transatlantic trade dispute.
EU struggles credibility
At the same time, pressure is growing on the EU to remain credible. The Anti-Coercion Instrument was explicitly created to give the EU more assertiveness in a world increasingly dominated by power politics and to facilitate appropriate countermeasures to attempts at economic blackmail.
If it is not used even in a conflict in which a state tries to force a political decision in its favor through massive tariff threats, it risks becoming purely symbolic politics.
