Explaining Europe’s ‘trade bazooka’ as the EU considers its first-ever use
European Union leaders met in Brussels on Sunday to weigh how to respond after President Donald Trump threatened sweeping tariffs tied to his push to open negotiations over Greenland.
Under Trump’s plan, a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland would take effect Feb. 1. The rate would rise to 25% in June unless those countries agree to talks over the sale of the territory.
Now, European leaders are considering a rarely discussed trade weapon.
French President Emmanuel Macron is urging the European Union to prepare what Brussels calls the anti-coercion instrument — better known as the “trade bazooka.”
It has never been used. But if deployed, it could carry serious consequences for U.S. companies, consumers, and transatlantic trade.
What is the ‘trade bazooka’?
The anti-coercion instrument (ACI) was created by the European Union in 2023 to deter and respond to economic pressure from foreign governments.
It gives the EU authority to retaliate when a country is seen as trying to force political or economic concessions through trade threats or restrictions.
According to the European Commission, the tool is designed first to discourage coercion — and only then inter it if talks fail.
The process is deliberate. And slow.
How the process works
The ACI unfolds in four stages: examination, determination, engagement, and response.
First, a member state or the EU can ask the European Commission to examine whether economic coercion is taking place. The commission then has up to four months to investigate.
Under EU rules, coercion is defined as “a situation whereby a third country seeks to pressure the European Union or an EU Member State into making a particular choice by applying, or threatening to apply, measures affecting trade or investment.”
Next comes the determination. If the commission finds no coercion, the process ends.
If it does, the EU formally asks the country to stop, thus opening engagement. Only if those talks fail does the bloc move toward a response.
What Europe could do
Once response measures begin, the commission says the EU could restrict access to its market, impose trade limits, or target services, investment, procurement, financial markets, or intellectual property.
“The list of options is broad,” the commission notes, covering goods, services, technology, exports and more.
Any action must be “proportionate,” targeted and temporary — and lifted once the dispute is resolved.
What it could it mean for Americans
Because the tool has never been used, its impact is uncertain.
The United States imports large volumes of pharmaceuticals, machinery, vehicles and high-tech equipment from Europe. Any disruption could affect prices or supply chains.
Services could also be in play.
CNBC notes that the U.S. runs a trade surplus with Europe in digital services, including companies like Amazon, Microsoft, Netflix, and Uber — all potential pressure points.
How far Europe goes, and who it targets, would determine how quickly Americans feel the effects.
For now, the “bazooka” remains theoretical. But with tariffs looming and diplomacy strained, it is now on the table.
The post Explaining Europe’s ‘trade bazooka’ as the EU considers its first-ever use appeared first on Straight Arrow News.
Ella Rae Greene, Editor In Chief
