Facing Trump, the EU’s Anti-Coercion Instrument is a ‘non -starter’

The European Union’s Anti-Coercion Instrument (ACI) has featured a lot in the headlines recently. Rather fancifully ACI has been portrayed as the “bazooka” that will force the Trump administration to” see sense” and bring the dilemma the EU has faced since President Trump’s ‘Liberation Day tariff policy announcement on 2 April.

There is no single silver bullet to resolving the challenge posed by the Trump tariff policy. The answer to the EU’s problems with President Trump is unlikely to be found in the EU’s Anti-Coercion Instrument. When, not if, the EU and President Trump resolve the present impasse on tariffs the resolution is unlikely to involve the EU’s Anti-Coercion Instrument.

Given the deals that President Trump has landed with the UK and pencilled in with Indonesia and Japan it might be wise for EU leaders to ease off on referencing the Anti-Coercion Instrument (ACI) as a possible threat to a US administration that would savor a brawl with the EU.

Facing East

The Anti-Coercion Instrument (ACI) was adopted in 2023. The instrument allows the EU to investigate and act against the use of economic coercion to interfere “in the legitimate sovereign choices of the Union or a Member State”.

The ACI is often viewed as ‘facing East’, as aimed at China. The creation of the Anti-Coercion Instrument is portrayed as arising from the dispute that broke out between China and Lithuania in July 2021 following an announcement by the Lithuanian Government that it was allowing the opening of a “Taiwanese Representative Office” in Vilnius. Similar offices in other capitals are titled “Taipei Representative Office”. China responded by recalling its ambassador to Lithuania, expelling the Lithuanian ambassador to Beijing and implementing a series of trade restrictions against Lithuania.

The idea of equipping the EU with anti-coercion powers in fact predates the dispute between Lithuania and China. The idea was referenced in Commission President von der Leyen’s State of the Union Letter of Intent of 16 September 2020. Just over a year later, in December 2021 the Commission adopted the legislative proposals for the Anti-Coercion Instrument.

While the Commission proposals were framed as the Lithuania -China dispute was bubbling away in the background the inspiration for the creation of an anti-coercion mechanism goes back to the 2018 threats by the Trump 1 administration to impose secondary sanctions against EU companies operating in Iran after the US unilateral withdrawal from the JCPOA.

Is ACI appropriate to addressing the Trump II trade war?

While it is useful for the EU to ‘remind’ the US that in addition to reciprocal tariffs – which apply to the trade in goods – that EU also has the Anti-Coercion Instrument which broadens the scope or sanctions ‘in the locker’. There are many reasons to suggest that the chances of triggering the ACI are slim.

First, a question arises as to the appropriateness of the ACI as a mechanism to challenge President Trump’s current actions.

The measures being pursued by the Trump I administration in 2018 that triggered the thinking in the Commission on the need for an Anti-Coercion Instrument were very specific. They were focused on specific actions and individual companies.

President Trump’s Liberation Day measures are not aimed at ‘picking off any individual member state’ or responding to a specific EU policy action. They are general, a scattergun approach rather than targeted. Their aim is universal rather than specific. As the US President explained when introducing the measures on 2 April, he sees his tariff policy as a means of forcing US trading partners to stop ‘taking advantage of the US’. The US is the injured party.

Viewed from that perspective while the ‘Liberation Day tariff policy is forceful, aggressive and threatening, it is questionable whether the policy aims that President Trump is pursuing – not just against the EU but globally – can be characterised as aligning with the actions that the ACI is aimed at addressing.

Practical considerations

There are several other considerations that question the view that the Anti-Coercion Instrument is the key to resolving the challenges presented by President Trump. The EU ‘baulked on using ACI in the Lithuania -China dispute.

While France has been vocal on the question of deploying ACI other member states, including those that have indicated general support for a robust response to the US have been reticent about putting their support for triggering the ACI on record.

Recently Chancellor Mertz was reported as having moved from the view that the EU should, as the UK did, go for a stripped down “bare bone” solution with the US to the point where he is willing to reference using the Anti-Coercion Instrument. That is a potentially significant development. Without having France and Germany on the same page deployment of ACI would be highly unlikely.

Even if Germany has become a ‘believer’ there are reasons to see the use of ACI as a ‘non-starter’. The most obvious of these is time. President Trump’s 1 August deadline looms.

While the ACI aims “to ensure an effective, efficient and swift Union response to economic coercion”, triggering and implementing the mechanism will take time.

Before the Instrument is activated the Commission is required to establish that coercive activity has taken place. That process could take up to four months.

Assuming that the Commission, on examination, concludes that coercion exists, member states will have to consider the Commissions and agree on any actions that the Commission recommends taking. The ACI Regulation allows the Council up to two and a half months to consider the Commission’s findings before voting on them.

When the Commission presents its recommendations another hurdle looms. Agreeing any actions proposed by the Commission requires the support of a qualified majority in the Council. Winning the support of 55% of the member states containing 65% of the EU’s citizens to implement an action against the US would be challenging.

Making new enemies

Using the ACI extends the range of activities open to the EU. The EU has effectively ‘maxed out’ in terms of retaliatory tariffs. The two packages that have been put together cover €93 billion of US exports to the EU.

While ACI broadens the options, using those options pose dilemmas.

Triggering the ACI would allow the EU to broaden the target list for its retaliatory actions. Putting US Tech giants into focus will likely reopen the digital taxation issue.

Trump has hailed the EU decision to shelve digital services taxes as a ‘victory’ and suggested that the move might help to win the EU a more favourable trade deal. A reversal on digital taxes would not go down well.

US banking and financial services, US corporations pursuing public sector contracts in Europe could also come in line for retaliatory actions if ACI is triggered. Targeting any of these sectors in addition to inviting reaction from the Trump administration could inflict considerable self-harm in Europe.

There is another dilemma. If the US business is seen to be under attack ‘from Europe’ it would likely shift US public and business opinion which has not been 100% favourable to President Trump’s trade policy against the EU. Providing domestic reinforcements for President Trump’s onslaught on the EU in the US either by shifting public sentiment or turning big US corporate lobbies to support President Trump would not be a smart move for the EU -to paraphrase Voltaire, this is no time to be making enemies.

De-escalation

Escalating the trade war that President Trump launched on 2^nd April is not smart. Triggering the Anti-Coercion Instrument whatever the justification for so doing is likely to broaden the conflict. As mentioned previously, the EU has exercised commendable restraint in responding to Trump’s Liberation Day pronouncements. Now is not the time for Commissioner Sefcovic and his team to be pressed to shift gear. Advocating a more aggressive approach by the EU negotiators may satisfy domestic political requirements in some EU member states but escalating a trade war that should never have started is not a good move: de-escalation seems the more advisable choice.

EUalive’s columnist Dick Roche is a former Irish Minister of State for European Affairs. His columns can be found here.

Caption: European Commission President Ursula von der Leyen (L) speaks with European Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency, Maros Sefcovic (R), at the start of the European Commission weekly college meeting in Brussels, Belgium, 9 April 2025. EPA/OLIVIER HOSLET