EU readies counter-measures against US tariffs
Rattled by President Donald Trump’s aggression towards Greenland, the European Union is readying counter-measures against the United States. But as primarily a trading bloc of 27 nations, the EU’s toolkit is mostly financial instruments, from steep tariffs on US goods to the so-called “trade bazooka” touted by French President Emmanuel Macron.
The term is shorthand for the bloc’s Anti-Coercion Instrument, or ACI, that could sanction individuals or institutions found to be putting undue pressure on the EU. Those sanctions could inflict untold billions of dollars in costs to US companies by restricting EU market access, barring them from EU public tenders, and potentially limiting foreign direct investment and curtailing the export and import of goods and services.
So far, there’s little backing in the 27-nation EU to use it, with the exception of France. Macron warned in Davos on Tuesday that additional tariffs by the US could force the EU to use its anti-coercion mechanism for the first time. “The crazy thing is that we could find ourselves in a situation where we use the anti-coercion mechanism for the very first time against the United States,” said Macron, arguing that allied countries should be focusing instead on bringing peace to Ukraine.
“Can you imagine it? It’s crazy. I regret it, but it is the consequence of unnecessary aggressiveness. Still, we must all remain calm.” Macron described the mechanism as “a powerful instrument, and we should not hesitate to deploy it in today’s tough environment.” EU leaders will hold an emergency summit in Brussels on Thursday over tensions with Trump.
The ACI was established by the European Commission in 2021 after Beijing restricted trade to Lithuania over its ties with Taiwan, which is claimed by China as its territory. “The primary objective of the ACI is deterrence. The instrument will, therefore, be most successful if there is no need to use it,” according to a commission statement issued before the dispute over Greenland.
It would take at least six months to activate the ACI. The value of EU-US trade in goods and services amounted to 1.7 trillion euros (USD 2 trillion) in 2024, or an average of 4.6 billion euros a day, according to the EU statistics agency Eurostat.
Europe’s biggest exports to the US are pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. French President Emmanuel Macron speaks during the Annual Meeting of the World Economic Forum in Davos, Switzerland. The crazy thing is that we could find ourselves in a situation where we use the anti-coercion mechanism for the very first time against the United States— Emmanuel Macron, France President.
US Treasury secretary decries Europe’s anger over tariff threat
Davos: US President Donald Trump will appear on Wednesday with other high-profile government and business leaders at the World Economic Forum in Davos, Switzerland, a day after the elite event produced contentious statements and economic threats arising from tensions between the US and Europe. Nearly 3,000 high-level participants from 130 countries, plus an untold number of activists and observers, are expected to converge on the annual event scheduled to last through Friday for dialogue, debate and deal-making in the Alpine resort.
Trump’s third visit as president comes as US allies worry about his ambition to take over Greenland, while Latin America grapples with his efforts to seize Venezuela’s oil. European Commission President Ursula von der Leyen on Tuesday called Trump’s planned new tariffs on eight of its countries over Greenland a “mistake” and questioned Trump’s trustworthiness. French President Emmanuel Macron said the EU could retaliate by deploying one of its most powerful economic tools, known colloquially as a trade “bazooka.”
The Associated Press asked Bessent about the Wall Street slump on Tuesday after Trump threatened to hit eight European countries with new tariffs as tensions escalated over his attempts to assert American control over Greenland.
The losses were widespread, with nearly every sector losing ground. Major indexes in the US extended losses from last week in what has been a wobbly start to the year. The S&P 500 fell 143.15 points, or 2.1 per cent, to 6,796.86. It is the steepest drop for the benchmark index since October. Bessent said he is not concerned.
US Treasury Secretary decries Europe’s anger over tariff threat
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US Secretary of the Treasury Scott Bessent on Wednesday decried Europe’s “anger” and “bitterness” over Trump’s tariff threat. Bessent urged the European Union to wait for Trump to arrive in Davos. He said he believes Europeans will be persuaded to support Trump’s concerns about Greenland once they hear his argument.
Bessent also said he is frustrated with the US Federal Reserve. The Supreme Court is hearing arguments on Wednesday over Trump’s effort to oust Federal Reserve governor Lisa Cook based on allegations she committed mortgage fraud, which she denies. No president has fired a sitting Fed governor in the agency’s 112-year history.
Trump en route to Davos after plane troubles
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Trump’s arrival in Switzerland has been delayed by mechanical trouble. There was a minor electrical problem late Monday on Air Force One, the aircraft that transports the president, leading the crew to turn around the plane about 30 minutes into the flight out of an abundance of caution. Trump boarded another aircraft, an Air Force C-32, a modified Boeing 757 normally used by the president for domestic trips to smaller airports, and continued his trip to Davos shortly after midnight.
