EditEU considers “nuclear option” to counter Trump’s 30% tariff threat
However, deploying the Anti-Coercion Instrument is not without risks and could prompt further retaliation
With U.S. President Donald Trump threatening to slap a 30% tariff on European Union imports by 1 August, the EU is weighing a bold and unprecedented response: deploying its Anti-Coercion Instrument (ACI), a powerful trade tool dubbed the “nuclear option” by diplomats.
As transatlantic trade tensions escalate, EU member states, led by economic powerhouse Germany, are preparing to wield this untested weapon to protect the bloc’s interests, according to sources familiar with the discussions. The move signals a dramatic shift in the EU’s approach to trade disputes, raising the stakes for negotiations with Washington.
The ACI, which took effect in late 2023, was designed to counter economic coercion by third countries attempting to influence EU policies through trade restrictions. While it has never been used, its potential activation against the U.S. underscores the gravity of the current standoff.
EU diplomats say the instrument’s wide-ranging measures go far beyond traditional tit-for-tat tariffs, offering a versatile arsenal to hit back at Washington’s aggressive trade tactics.
“This is about sending a clear message,” one senior EU official told Reuters. “We won’t stand idly by if the U.S. tries to strong-arm us.”
A multifaceted counterstrike
The ACI’s toolkit is expansive, comprising a 10-point list of retaliatory measures tailored to inflict maximum economic pressure while minimising blowback for the EU’s 27 member states. Beyond imposing counter-tariffs on U.S. goods, the EU could introduce quotas or licensing requirements to restrict American imports or exports, disrupting supply chains for key U.S. industries.
Such measures could target everything from agricultural products to high-tech goods, hitting American exporters where it hurts.
One of the ACI’s most potent weapons lies in the EU’s €2 trillion ($2.3 trillion) annual public procurement market, a cornerstone of the bloc’s economy. The EU could exclude U.S. companies from bidding on lucrative contracts – such as those for infrastructure or defence – if American goods or services account for more than 50% of the contract’s value.
Alternatively, the bloc could impose penalty score adjustments to make U.S. bids less competitive, effectively sidelining American firms in favour of European or other global competitors.
The EU is also eyeing the U.S.’s substantial trade surplus in services, particularly in the digital sector. Restrictions on American tech giants like Amazon, Microsoft, Netflix, or Uber could disrupt their operations in Europe, a market critical to their global revenue streams. Additionally, the ACI allows the EU to curb U.S. foreign direct investment, the largest source of FDI in the bloc, or limit protections for American intellectual property rights, potentially affecting industries like entertainment and pharmaceuticals.
Other measures could restrict U.S. access to EU financial services markets or block sales of American chemicals and food products in Europe.
A deliberate but complex process
Activating the ACI is no simple task, requiring careful coordination among EU member states. The process begins with the European Commission, which has up to four months to investigate whether Trump’s tariffs constitute economic coercion. If confirmed, the finding must be approved by a qualified majority of EU members – at least 15 countries representing 65% of the bloc’s population – a higher bar than for standard retaliatory tariffs. This hurdle reflects the ACI’s weight as a last-resort measure.
Once coercion is established, the Commission would typically seek dialogue with the U.S. to resolve the dispute. If negotiations fail, the EU can adopt response measures within six months, subject to another member state vote. These measures must take effect within three months, ensuring a relatively swift but deliberate response.
The ACI’s design draws on lessons from past trade disputes, such as China’s alleged targeting of Lithuania in 2021 after Vilnius allowed Taiwan to open a de facto embassy.
High stakes, high risks
The EU’s consideration of the ACI reflects growing frustration with Trump’s trade policies, which echo his first administration’s aggressive use of tariffs. Germany, the EU’s largest economy, is among the member states pushing for a strong response, wary of the economic fallout from U.S. tariffs on European exports like cars and machinery.
However, deploying the ACI is not without risks. Targeting U.S. services or investment could provoke retaliation, potentially harming EU exporters or raising costs for European consumers reliant on American digital platforms.
Moreover, the ACI’s untested nature adds uncertainty. While its broad scope offers flexibility, miscalibration could disrupt transatlantic trade ties, which remain critical for both sides. The EU’s public procurement market, for instance, relies on global competition, and excluding U.S. firms could drive up costs or delay projects.
Still, the threat of ACI measures serves as a powerful deterrent, signalling to Washington that the EU is prepared to play hardball. As the 1 August deadline looms, the EU’s next steps will depend on whether Trump follows through on his tariff threat and whether negotiations can defuse the crisis.
For now, the bloc is keeping its powder dry, hoping the spectre of the ACI will push the U.S. toward a deal. “This is a last resort,” another EU diplomat said. “But we’re ready to use it if we have to.”
With Reuters, edited by g.g.
Caption: Belgian beer is stocked on shelves for sale at a liquor store in Los Angeles, California, USA, 14 March 2025. On 13 March 2025, US President Donald Trump threatened 200 percent tariffs on European Union (EU) wine and alcohol imports in response to the EU’s tariff threats on American products. EPA/ALLISON DINNER
Updated: July 22, 2025 - 06:31
