President Donald Trump implemented a 20% all-encompassing tariff on the European Union Wednesday, but the bloc has “a strong plan” in its back pocket to pressure the U.S.
On "Liberation Day," Trump imposed a minimum 10% tariff on numerous countries to “make America wealthy again.” Trump also revealed a sweeping
20% tariff on all imports from the EU. European Commission president Ursula von der Leyen has previously said she is confident in the bloc’s ability to stand up for itself, and hopes to strike a deal.
“Europe has not started this confrontation,” von der Leyen said during a speech Tuesday in the European Parliament. “We do not necessarily want to retaliate, but if it is necessary, we have a strong plan to retaliate and we will use it.”
That plan could involve the
Anti-Coercion Instrument (ACI), allowing the bloc to place market limitations on service companies that could hit
American tech or Wall Street. Put in place in 2023, the ACI allows the bloc to respond to coercion through diplomatic means by any retaliatory measure necessary like import or export restrictions or limitations on access to the European market.
“It’s called the big bazooka,” Fabrizio Pagani, a partner at the investment bank Vitale and a former top economic official in Italy, told DealBook. “I personally think the big bazooka should be used first of all as a deterrent. So put it on the table, and let’s negotiate,” Pagani said.
According to a preliminary plan obtained by
DealBook, in response to tariffs, the EU officials have brought up the possibility of implementing ACI to limit American banks’ ability to access the bloc’s public procurements market, essentially barring banks from projects worth $2.18
trillion each year. Additionally, the plan suggested targeting the roughly
$327.02 billion annual flow of European investment into American companies.
“It’s more the nuclear option,” global economist for ING Carsten Brzeski told the
New York Times.