EU readies trade bazooka against US tariffs over Greenland dispute

The European Union is preparing to deploy its most potent trade measures in response to US President Donald Trump’s escalating tariff threats over Greenland. Following an emergency meeting of ambassadors on Sunday, EU member states expressed strong unity with Denmark and Greenland, but chose not to immediately trigger the bloc’s Anti-Coercion Instrument (ACI). The ACI, dubbed the “trade bazooka,” allows the EU to punish economic coercion with measures such as restricting market access, investment, and intellectual property rights.

The EU is instead holding the measures in reserve while pursuing a last-ditch diplomatic solution. However, the bloc is ready to revive a suspended €93 billion package of retaliatory tariffs on US goods if Trump imposes new duties. This package was prepared last year in response to Trump’s initial tariff threats, but was shelved after a tentative US-EU trade deal was struck last summer. An EU diplomat noted that this package could “automatically come back into force on February 6” if no agreement is reached.

The confrontation intensified on Saturday when Trump announced a 10% tariff on imports from eight European NATO nations, including Denmark, Norway, and France, for opposing his bid to acquire Greenland. The levy is set to rise to 25% by June 1 without a deal. The EU’s potential countermeasures exist on two levels, with the ACI being the most significant. French President Emmanuel Macron has reportedly called for the activation of the ACI, stating that Trump’s threats are unacceptable.

European Council President Antonio Costa has convened an extraordinary summit of EU leaders for Thursday, January 22, to coordinate a united stance. The bloc is “ready to defend itself against any form of coercion,” Costa stated. The EU’s response to Trump’s tariff threats is significant, as it marks a potential escalation in trade tensions between the two economic powers. The situation will be closely monitored in the coming days, as the EU and US navigate this complex trade dispute. The use of the ACI would be unprecedented, and could have far-reaching implications for global trade.