BRUSSELS — The European Union is mobilizing its substantial economic defenses in response to escalating tensions with the United States, particularly concerning President Donald Trump’s aggressive posture toward Greenland. As a primarily trade-oriented bloc of 27 nations, the EU’s countermeasures center on powerful financial instruments that could potentially cost American companies billions.
The centerpiece of Europe’s defensive strategy is the Anti-Coercion Instrument (ACI), colloquially termed the ‘trade bazooka’ by French President Emmanuel Macron. This mechanism, established in 2021 following China’s trade restrictions against Lithuania over Taiwan relations, enables the EU to sanction individuals or institutions exerting undue pressure on member states.
Speaking at the Davos forum on Tuesday, Macron issued a stark warning that additional U.S. tariffs could compel the EU to deploy its anti-coercion mechanism for the first time against its American allies. ‘The crazy thing is that we could find ourselves in a situation where we use the anti-coercion mechanism for the very first time against the United States,’ Macron stated, expressing regret over what he termed ‘unnecessary aggressiveness.’
The potential sanctions under the ACI framework include restrictive market access measures, exclusion from EU public procurement contracts, limitations on foreign direct investment, and constraints on goods and services trade. Despite the powerful nature of these tools, significant hesitation exists among EU members, with France currently standing as the primary advocate for their potential deployment.
EU leaders are convening an emergency summit in Brussels on Thursday to address the growing tensions. The timing is particularly sensitive as the bloc emphasizes the need for allied cooperation in addressing the conflict in Ukraine.
The economic stakes are enormous: EU-U.S. trade in goods and services reached €1.7 trillion ($2 trillion) in 2024, averaging €4.6 billion daily. Europe’s major exports to the American market include pharmaceuticals, automobiles, aircraft, chemicals, medical instruments, and premium alcoholic beverages.
According to European Commission documentation, the ACI requires at least six months to activate, with its primary objective being deterrence rather than punishment. As the commission previously stated, ‘The instrument will, therefore, be most successful if there is no need to use it.’