The European Union is preparing to impose retaliatory measures on US technology companies if President Donald Trump follows through on his threat to introduce new tariffs on EU goods.
The European Commission is considering deploying its “anti-coercion instrument” (ACI) for the first time, a mechanism designed to counter trade pressure from foreign governments.
Officials familiar with the matter have indicated that the EU may target major US service industries, including Big Tech, in response to potential tariffs. The ACI, which came into effect in 2023, was originally designed to deter coercive trade practices and was previously used as a warning against China. Under this framework, the EU can restrict trade in services if another country imposes tariffs on goods to force policy changes.
Trump has previously suggested using tariffs as leverage against the EU, citing trade imbalances and Brussels’ regulatory actions against US tech firms. Additionally, officials pointed to past instances, such as Trump’s attempt to pressure Denmark into selling Greenland, as examples of coercive tactics that would justify a response under the ACI.
Scope of Retaliatory Measures
The so-called “bazooka” tool allows the EU to impose a variety of countermeasures, including revoking protections for intellectual property rights and restricting the commercial exploitation of software downloads and streaming services. Furthermore, the bloc could block foreign direct investment or limit market access for US financial services, including banking and insurance.
While some EU officials argue that retaliation is necessary to protect European industries, others are wary of escalating tensions into a broader trade war. One official noted that while the EU has experience in imposing tariffs on goods, expanding retaliatory measures into the services sector and intellectual property rights would be an unprecedented move.
Trump’s Tariff Strategy and EU Response
Last week, Trump reaffirmed his stance on imposing tariffs on EU goods, citing the bloc’s trade surplus in goods with the US and its enforcement actions against American technology firms. However, he has not specified when the tariffs would take effect or whether negotiations could provide a reprieve, as was the case with Canada and Mexico.
EU trade ministers convened in Warsaw on Tuesday to discuss a potential response. According to sources present at the closed-door meeting, the majority of ministers expressed support for retaliatory measures if necessary. EU Trade Commissioner Maroš Šefčovič stated that while the EU preferred negotiation, it would act decisively if targeted. He also pointed out that despite the EU’s surplus in goods trade with the US, the bloc runs a deficit in services, a key factor in shaping its response strategy.
Debate Over Timing and Proportionality
While the ACI provides a broad toolkit for retaliation, some member states have expressed concerns about escalating tensions at a time of economic uncertainty. An EU diplomat stated that while the bloc wants to de-escalate the situation, it must also be prepared to respond.
Under EU rules, any retaliatory measures must be proportionate and approved by at least 15 of the 27 member states. The European Commission must also demonstrate that EU industries are suffering harm as a result of US tariffs. The approval process could take several weeks, with past cases—such as the EU’s response to Trump’s 2018 steel and aluminium tariffs—taking around three months to finalise.
In contrast, Canada and Mexico announced retaliatory measures within hours of Washington’s decision to introduce tariffs of up to 25 per cent. Trump later suspended the tariffs on both countries, reportedly in exchange for commitments to curb migration and drug trafficking.
Calls for Faster Action
French Trade Minister Laurent Saint-Martin has called for a swifter response mechanism, arguing that speed is critical in trade disputes. He emphasised the need for unity within the EU and urged member states to be prepared for rapid action.
Some EU officials have pointed to the bloc’s quick response to crises such as the Russian invasion of Ukraine and the COVID-19 pandemic as evidence that it can act swiftly when necessary. However, a full-scale trade conflict with the US would represent a significant challenge, particularly given the deep economic ties between the two regions.