The European Union is preparing potential responses to actions taken by US President Donald Trump, including recent statements regarding Greenland.
As a trading bloc, the EU’s primary means of response involve financial tools. These range from implementing tariffs on US goods to utilizing a more forceful measure referred to as the “trade bazooka,” initially proposed by French President Emmanuel Macron.
Currently, a majority of the 27 EU nations are expressing reservations about deploying this more aggressive approach.
What is the ‘trade bazooka’?
The “trade bazooka” is a shorthand term for the EU’s Anti-Coercion Instrument. This instrument allows for a variety of measures to block or restrict trade and investment from countries that are determined to be exerting undue pressure on EU member nations or corporations.
These measures could include limiting the import and export of goods and services, preventing countries or companies from participating in EU public tenders, or restricting foreign direct investment.
The most severe application of this instrument could result in billions of dollars in losses for US companies and the broader American economy.
Frequently Asked Questions
What prompted the EU to consider these countermeasures?
The EU is responding to actions and statements made by US President Donald Trump, including those concerning Greenland.
What is the range of potential EU responses?
The EU’s options include implementing tariffs on US goods and utilizing the Anti-Coercion Instrument, also known as the “trade bazooka.”
What could the “trade bazooka” actually do?
The “trade bazooka” could involve curtailing trade and investment, barring companies from EU tenders, and limiting foreign direct investment, potentially closing off access to the EU’s 450 million customer market.
How might the EU’s response ultimately impact global trade relations?
