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The EU is planning to hit Silicon Valley with vindictive measures if Donald Trump follows threats to impose tariffs on the Block, on the first use of a “Bazooka” of Brussels that could attract services to a trading war.
The European Commission is seeking to use its so-called “ancient instrument” in a possible dispute with Washington, two officials with knowledge of plans, which would allow the EU to aim for US service industries like Big Tech.
One official said “all options are on the table” and told about ACI as the harshest response available without violating international law.
The vehicle, which was drafted during Trump’s first term and then used as an obstacle against China, allows the EU executive wing to impose restrictions on the service trade if it determines that a country is using fees for goods for it Forced changes in politics.
Trump’s threat to use fees to force Denmark to submit Greenland and suppress the EU to remove implementation actions against US technology companies would qualify, officials said.
Called a “bazooka” by some EU officials when it came into force in 2023, ACI allows the block to choose from a wide range of revenge measures, such as revocation and transmission services.
It also allows the EU to block foreign direct investment or limit market access to banks, insurance and other financial services firms.
A second official warned that while the EU was capable of dealing with goods tariffs, it could still deal with the expansion of a dispute in new areas, including intellectual property services and rights.
Trump last week said he would “absolutely” “EU tax fees”, citing Brussels’ actions against American technology companies and its large trade deficit in goods. He did not provide details on when the measures will be approved or whether the block may negotiate a relapse, as Canada and Mexico have secured.
EU Commerce Ministers met on Tuesday in Warsaw to discuss his threats. Informed officials about closed -door discussions said the majority expressed support for punitive actions if necessary.
Trade Commissioner Maroš Šefčovič said he wanted to negotiate a way to avoid tariffs, but added: “If we are hit, we will react strongly.”
Šefčovič noted that the Block had a great deficit with the US in services even though it enjoyed a surplus of goods.
Some member states are careful to fight a trade war when economic growth is so weak. “We want to escalate,” said an EU diplomat with knowledge of discussions.
Any revenge should be proportional and the commission will have to provide evidence of damage to the EU industries. It should also require approval from at least 15 of the 27 member states. Consultations can take several weeks; The latest revenge fees imposed in the US in 2018 took three months to adopt.
In contrast, Canada and Mexico announced vengeful measures last week within hours of Washington’s decision to impose tariffs by up to 25 percent.
Trump then suspended tariffs in both countries, apparently in exchange for commitments to hit migrants and drug trafficking.
Laurent Saint-Martin, France’s Minister of Trade, told Financial Times that despite ACI, the EU may need faster revenge measures. “Speed is one of the main issues. We have to be ready sooner than the last time. We have to be more united and faster.”
In March 2018 Trump set a 25 percent tariff on steel and 10 percent in aluminum. The EU took three months to approve its vengeful measures to 2.8BN € of American goods.
An EU diplomat said the block can move quickly in a crisis, adding: “Look at our response to the Russian occupation of Ukraine or Covid Pandemia.”
