European leaders are in talks to deploy its most powerful economic weapon, the anti-coercion instrument — informally known as the “trade bazooka” — to counter President Donald Trump’s threats to impose tariffs if Denmark threatens to sell Greenland to the U.S.
What is the ‘trade bazooka’?
The Anti-Coercion Instrument provides a legal framework for the bloc to defend its sovereign policy choices against any non-EU country using economic intimidation, like tariffs or quotas, to interfere with EU affairs.
Unlike traditional trade measures that require unanimous consent from all 27 member states, the ACI can be triggered by a qualified majority of 15 countries, representing 65% of the EU population.
If activated, the EU could deploy a range of response measures targeting the coercing country.
These measures include imposing customs surcharges through punitive tariffs on imports of goods into the EU’s single market.
The bloc could also implement service restrictions by limiting access to the European market for foreign banking, insurance, or digital services.
Furthermore, the EU could suspend intellectual property rights, a move that would allow European firms to bypass patents or copyrights held by companies from the coercing nation.
Why was the ‘bazooka’ created?
The ACI, or “bazooka,” was adopted by the European Union in late 2023 amid heightened geopolitical tension and the increasing “weaponization” of trade.
While it was originally conceived during Trump’s first term, its final design was heavily influenced by China’s economic pressure on Lithuania.
The tool was designed as a last resort option intended for deterrence. By removing the requirement for unanimous consent among member states, the EU aimed to signal that it could defend its economic sovereignty quickly and uniformly.
Why are leaders suggesting using it now?
The instrument is back in focus because of Trump’s recent ultimatum. He has threatened to impose a 10% tariff starting Feb. 1, rising to 25% in June, on eight European nations, including Denmark, France, and Germany.
Trump has said the only way to end the tariff and stop its increase is for a deal for the “complete and total purchase” of Greenland to be reached.
European leaders, led by French President Emmanuel Macron, argued this meets the legal definition of “economic coercion.”
Macron said that using trade threats to force the sale of a territory is unacceptable interference in sovereign affairs.
As Bernd Lange, chair of the European Parliament’s trade committee, stated, the ACI was created for this exact scenario: when trade is used as an instrument for political pressure.
How does it work?
Implementation of the ACI is a multistage process that begins with a formal examination by the European Commission, which has up to four months to investigate claims of economic coercion.
If the commission finds evidence of coercion, it submits a proposal to the Council of the EU, which then has eight to 10 weeks to determine the existence of coercion through an implementing act.
TRUMP INVITED PUTIN TO JOIN GAZA ‘BOARD OF PEACE’: KREMLIN
Once the coercion is determined, the EU enters a mandatory engagement phase during which the commission engages in diplomatic consultations, mediation, or adjudication with the third country to seek a resolution.
If these efforts cannot stop economic coercion within approximately six months, the commission may finally adopt response measures.