EU still has a €93 billion ‘brahmastra’ it can use against Trump’s tariff threats

As the disagreement between the US and the European Union over Greenland came to a head, Trump vowed to implement a wave of increasing tariffs on EU members Denmark, Sweden, France, Germany, the Netherlands and Finland, along with Britain and Norway from February 1, till the US is allowed to buy Greenland. This is the latest instance of Trump using the tariff threat to get his way. 

While this appears to have cornered the EU, it still has its ‘Anti-Coercion Instrument’ – a brahmastra of sorts – to be used against third countries that put economic pressure on its member countries to force a policy shift. 

With the ACI that permits restrictions on investments and curbs the export of services, the EU could hit the US with 93 billion euros' worth of tariffs.

WHAT IS THE ANTI-COERCION INSTRUMENT?

The ACI was approved in 2023, and is seen by many as the ‘nuclear option’ that is meant to be used as a deterrent. The ACI allows the 27-nation EU to retaliate not only with counter-tariffs on US exports but also has a far-reaching scope. 

Here’s what the ACI will allow the EU to do: 

• Curb import of export of goods through quotas or licences
• Restrict public tenders in bloc, worth some €2 trillion ($2.3 trillion) per year
• Measures against services where the US has a trade surplus with the EU, including from digital service providers like Amazon, Microsoft, Netflix or Uber
• Curb foreign direct investment from the US – the biggest investor in the EU
• Restriction on protection of intellectual property rights
• Restriction on access to financial services markets
• Restriction on the ability to sell chemicals or food in the EU

The European law allows the European Commission up to four months to examine possible cases of coercion. It would then put the finding to EU members who have 8-10 weeks to confirm the findings. The commission would also attempt to negotiate with the third country in a bid to stop their coercion but if that fails , it would put the ACI measures up for vote, and implement them.