As the European Union (EU) continues its trade negotiations with the United States, the bloc is also getting ready to take tough action if discussions fall apart. With just weeks left before the August 1 deadline to lift a freeze on mutual tariffs, the EU is considering using its strongest trade weapon—the Anti-Coercion Instrument (ACI)—for the first time.
EU Unites Behind Possible Retaliation
At least seven EU member countries, led by France, support the plan to activate the ACI if talks with the US collapse. This tool is designed to protect the EU against economic threats from outside powers. Now, it could be directed at its biggest trading partner—the United States—especially after former President Donald Trump threatened to slap a 30% tariff on EU exports.
Using the ACI could trigger a larger trade conflict between the US and Europe, which might have ripple effects across the already shaky global economy.
France Urges Firm Stand
Benjamin Haddad, France’s Minister for European Affairs, emphasized the need to show strength during these talks. Speaking to Bloomberg, he said, “In this negotiation, you need to show strength, you need to show force, unity and resolve.”
He also mentioned that the EU could go beyond its earlier proposals and target nearly €100 billion worth of US goods under the ACI mechanism.
EU’s Potential Countermeasures
If Trump’s tariff threats become reality, the EU has several options lined up to strike back:
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Digital Taxes: The EU could impose new taxes on major American tech companies operating in Europe.
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Investment Limits: The bloc may restrict how and where US firms invest within the EU.
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Public Contract Restrictions: European governments could block US companies from bidding on public projects or participating in certain industries.
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Tariffs on US Goods: The EU has prepared a list of American products worth up to €93 billion that could face new tariffs.
Divided Views Within the EU
Despite France’s push, not all EU members are on board. European Commission President Ursula von der Leyen warned against jumping the gun. “The ACI is created for extraordinary situations,” she said. “We are not there yet.”
Even though Trump recently sent a letter warning of 30% duties on EU exports starting next month, the EU hasn’t abandoned negotiations. Talks are ongoing, despite existing tariffs of 25% on EU cars and parts, and 50% on steel and aluminum.
Hope for a Deal
Michael McGrath, the EU Commissioner, told Bloomberg that they still hope to reach an agreement before August 1. He added that leaders were “surprised and disappointed” by Trump’s recent letter, but they remain committed to dialogue.
Meanwhile, top EU trade official Maros Sefcovic traveled to Washington on Wednesday for face-to-face discussions. European Commission spokesman Olof Gill confirmed that Sefcovic was meeting US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer during his visit to Washington, D.C.
