Trump's tariff threats escalate, EU considers using anti-coercion tools to counter the US

January 22 News, as Trump once again threatened to impose tariffs on European goods, the European business community is urging the EU to prepare for the worst-case scenario. Several industry organizations told CNBC that if the US insists on imposing a 10% tariff on some European countries including the UK and Norway starting February 1, the EU should seriously evaluate the activation of trade retaliatory mechanisms such as the “Anti-Coercion Instrument” (ACI).

The German Chamber of Commerce and Industry (DIHK), representing approximately 4 million enterprises, stated that all existing trade defense measures of the EU must be reassessed. While tough tools like the ACI should be used as a last resort, they should not be ruled out. Ole Erik Almlid, CEO of the Norwegian Business Association, also pointed out that Europe should retain the space for “decisive action” while working to ease tensions, to prevent further erosion of its interests.

Bertram Kawlath, President of the German Mechanical Engineering Industry Association (VDMA), explicitly stated in a declaration that Europe cannot accept “extortion” from the US. He emphasized that Greenland is part of the European system, and if the EU makes concessions on this issue, it will only encourage Trump to make more demands and apply higher tariffs.

Economic pressures should not be overlooked either. The British Chamber of Commerce estimated that if a 10% tariff is implemented, the UK’s export losses to the US could increase to £15 billion by June. Shevawn Harilan pointed out that there is a high degree of capital and trade interconnection between the UK and the US, and the bilateral trade volume and investment scale provide tangible leverage for negotiations.

Meanwhile, analysts at Deutsche Bank believe that European countries hold large amounts of US assets and are not entirely passive in the game. However, Volker Treier warned that a new round of tariffs would further compress the space for German companies’ transatlantic business. Kawlath also added that the machinery and equipment industry has already borne tariffs of up to 50% on steel and aluminum, and combined with complex administrative costs, more than half of export orders are at risk.

Against the backdrop of Trump’s continued pressure through tariffs and geopolitical issues, whether the EU will activate the anti-coercion tools has become a key variable influencing the direction of US-Europe economic and trade relations.