While the reasons underlying Trump’s sudden turnaround on tariffs remain unclear, it’s definitely clear that the EU was prepared to fight back – fiercely.
So fiercely, in fact, that some member states were considering a so-called “trade bazooka” against the United States.
“EU agonizes over using its trade ‘bazooka’ to hit back at Trump’s mega tariff,” Politico proclaimed in its emotional headline.
Well then. That’s certainly a way to garner clicks.
“When it comes to sticks, the EU wants to create the impression of negotiating from a position of strength (while hoping that the financial market turmoil unleashed by Trump’s tariff broadside will sap his fighting spirit). But EU capitals are divided over exactly which stick they should use,” Politico noted.
And it would appear that some nations are ready to use a rather huge stick against the United States, to put it mildly.
In the form of a very large, industry-crippling “stick.”
“The Anti-Coercion Instrument (ACI), a nuclear option that has yet to be deployed, would empower the EU executive to hit U.S. service industries such as tech and banking … Trump’s tariffs – which would affect €380 billion worth of EU exports – are exactly the kind of economic bullying the EU had in mind when it designed the ACI,” Politico continued.
Sadly, the ACI was probably designed with nations outside of the United States in mind, but that’s apparently the extent to which formerly close international relationships have deteriorated.
“But just because his ‘reciprocal’ tariff of 20 percent on all EU goods is imminent (along with the 25 percent levies on steel, aluminum and cars already in force), that doesn’t mean the 27-nation bloc is ready to activate its bazooka. Doing so, as one minister put it, would mean the bloc really is in a trade war,” Politico continued.
And, rather fortunately, it is a good thing that Trump pulled out of the trade war … at least for now.
Unsurprisingly, Spain, France, and Germany have been particularly aggressive in their calls for harsh retaliation against the United States, openly championing the Anti-Coercion Instrument as a viable option.
Germany’s outgoing Economy Minister Robert Habeck, for instance, seems rather eager to hit American tech companies where it really hurts.
“One also has to look closely at [the Anti-Coercion Instrument] … These are measures that go far beyond customs policy. They have a broad palette. They then include digital services, but have a wide range of instruments, much more than just via a digital tax,” Habeck declared.
“Much more,” huh? Luckily, the breaks have been put on the trade war for now, in that case.
Habeck’s counterpart in Spain, Carlos Cuerpo, firmly concurred.
“The Anti-Coercion Instrument is there for us to use in case we find it necessary. But again, the message that the EU should just take today is a positive one … We need to explore the use of all the instruments that are at our disposal. That’s for sure. We should not rule out anything,” Cuerpo proclaimed.
However, both Ireland and Italy remain more “cautious” about deploying such a “trade bazooka,” especially as their respective “pharmaceutical and wine sectors are in the eye of the tariff storm.”
“Beyond a carefully crafted message of a ‘proportional’ and ‘united’ response from all of the bloc’s trade ministers at their meeting in Luxembourg on Monday, the key question of how to respond to U.S. President Donald Trump’s trade broadside threatens to open cracks in the bloc’s fragile cohesion,” Politico noted.
You don’t say.
Indeed, a separate report from Politico found that the “cohesion” is threatened in part by the upcoming meeting between Trump and Italian Prime Minister Giorgia Meloni, who has portrayed herself as a potential “bridge” between the US and EU.
French Industry Minister Marc Ferracci was quite peeved, to put it mildly.
“We need to be united because Europe is strong if it’s united … If we start having bilateral talks, of course it’ll break this momentum [on European unity],” Ferracci fumed.
Luckily, there is no need to continue such “momentum now.”
Especially as even the United States now feels the need to cool down … given that it just ruled out a major trade war.
For now, anyway …
Author: Jane Jones
