In December 2021, when China moved to freeze trade relations with Lithuania after a diplomatic spat involving the opening of a \u201cTaiwanese\u201d representative office in the Lithuanian capital of Vilnius, European leaders sought leverage against Beijing\u2019s use of what they described as economic coercion.\u00a0\u00a0<\/p>\n
The result was the adoption of a legal tool in 2023 designed to fight fire with fire: an \u201canti-coercion\u201d instrument, or ACI, that gives the European Commission the authority to impose countermeasures to deter coercion by a third country. Now, amid fresh tension between the Trump administration and European leaders over Greenland, the EU is threatening to deploy its ACI, the so-called \u201ctrade bazooka,\u201d to stop the United States from exerting economic pressure to achieve a political objective.<\/p>\n
\u201cIt is a pretty new policy instrument for the EU,\u201d said Mai\u2019a Cross<\/a>, dean\u2019s professor of political science, international affairs and diplomacy at Northeastern University, and an expert on international relations, space diplomacy and European security. She said it would be the first time Europe would look to activate the policy since its adoption in 2023.\u00a0<\/p>\n \u201cAlthough the instrument was intended with countries like Russia and China in mind, Trump\u2019s ultimatum to the EU to either give up sovereign control of Greenland or face new tariffs is absolutely in line with the purpose of the instrument, which is to prevent coercion,\u201d Cross said.\u00a0<\/p>\n So, how exactly does the trade bazooka work?\u00a0<\/p>\n European leaders would closely examine the case and institute a series of measures to restrict U.S. access to EU markets, Cross said. Those measures range from potentially punitive duties, or tariffs, and other barriers to market access, to the exclusion of foreign firms from EU funding, finance and investment \u2014 even rewriting certain rules governing intellectual property protections.<\/p>\n Cross said Europe could also single out specific U.S. companies in an effort to apply targeted pressure while limiting broader economic fallout, which she noted could be substantial, should leaders take that step.\u00a0<\/p>\n \u201cUsing the instrument would harm both economies, but at least the EU would have something available to efficiently retaliate against new U.S. tariffs that are explicitly intended to force Europe into supporting Trump\u2019s seizure of Greenland,\u201d Cross said.<\/p>\n On Wednesday, Trump spoke<\/a> at the World Economic Forum in Davos, Switzerland, after days of escalating rhetoric over his administration\u2019s interest in the icebound nation, which has been part of the Kingdom of Denmark for more than 300 years. He appeared to defuse the tension during a speech in which he said that the U.S. wouldn\u2019t take Greenland by force.<\/p>\n \u201cI won\u2019t do that,\u201d Trump told world leaders. \u201cThat\u2019s probably the biggest statement I made, because people thought I would use force. I don\u2019t have to use force. I don\u2019t want to use force. I won\u2019t use force.\u201d<\/p>\n Some experts question whether the ACI would be an effective weapon against such a fast-moving target. Ravi Ramamurti<\/a>, founder and director of Northeastern University\u2019s Center for Emerging Markets and university distinguished professor for international business and strategy, said the instrument \u201ccannot be deployed at the speed necessary to deal with Trump\u2019s mercurial trade policies.\u201d\u00a0<\/p>\n \u201cTrump has relied on [International Emergency Economic Powers Act] to make unilateral, snap decisions, raising and lowering tariffs on a whim,\u201d Ramamurti said. \u201cNothing in the EU arsenal, including ICA, can counter that.\u201d\u00a0<\/p>\n Indeed, should the trade bazooka be unleashed in full force, Ramamurti said it could trigger an \u201cugly trade war\u201d between the U.S. and its European allies that will slow growth in both blocs, crash stock markets and stoke more inflation fears.<\/p>\n \u201cThe only winners from such an escalation will be countries like Russia and China,\u201d he said. \u201cIf the EU doesn\u2019t want to escalate the trade war with the U.S., it might use a more measured response, something more like firing a pistol than a bazooka.\u201d<\/p>\n Tanner Stening is an assistant news editor at Northeastern Global News. Email him at t.stening@northeastern.edu. Follow him on X\/Twitter @tstening90<\/a>.<\/p>\n