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The tariffs will begin on August 1st, but everyone is waiting to see how the EU will respond – and if the Union will activate it’s biggest trade weapon.
The tariffs will begin on August 1st, but everyone is waiting to see how the EU will respond – and if the Union will activate it’s biggest trade weapon.
What is happening?
During the weekend, US President Donald Trump has announced a 30 % tariff against the EU starting August 1st.
No deal yet
The 27 members of the Union are now debating how to react, as a US-EU trade deal is still not done – and many doubt it will be made before we hit August.
Internal disagreements
President of the European Commission, Ursula von der Leyen, has said that the Union is still trying to negotiate a deal that both EU and the US will benefit from, downplaying possible retaliation against Trumps tariffs.
But not everyone agrees with her.
Ministers of Commerce meeting today
The 27 Ministers of Commerce from the EU-countries are meeting today, Monday, to discuss what to do about the tariffs, and we’re likely to get some harsh statements after the meeting
Will the EU use it’s super weapon?
The biggest question of all is whether the EU will concider using it’s “trade bazooka” – a tool that has never been used before, but has the ability to do unbelievable economic damage to any country trying to put economic pressure on a EU member state.
The Anti-Coercion Instrument (ACI)
The “bazooka” is the The Anti-Coercion Instrument (ACI), which the EU members agreed on in 2023, when China put economic pressure on the EU member state Lithuania.
And even though it wasn’t activated, it scared China into easing the pressure.
So what can it do?
The bazooka consists of four possible counter measures, the EU can activate when a member state is being coerced by an outside country – and it’s heavy counter measures.
Can block US companies from the EU
The first part of the ACI is that American companies can be blocked from participating in public procurements in all the EU states.
This would hit companies such as Microsoft, Jonhnson & Johnson and General Eletrics very hard.
Can block investment rights
Another part of the ACI is the option to simply block American companies from investing in the 27 members states of the EU.
Can upend patents
A third option is to deny American companies to use their patents in the EU.
Export block
The fourth option is that the EU can choose to issue an export block og heavily limit goods that companies in the EU are allowed to export to the US.
Basically, it could cut off the US supply of certain goods that the US cannot produce itself, and it would most likely be goods like medicine and medicinal equipment.
