The European Union is considering deploying its powerful Anti-Coercion Instrument (ACI) in response to potential tariff threats from U.S. President Donald Trump. If enacted, this move could mark the first use of the ACI since it came into effect at the end of 2023.
EU diplomats have indicated that a growing number of member states, including Germany, support using the ACI as a deterrent against a proposed 30 percent tariff on EU imports by August 1. The ACI is seen by many as a “nuclear option” due to its wide-ranging measures, extending beyond simple counter-tariffs.
The ACI provides the EU with a toolkit of ten possible actions to counter economic pressure from third countries. These measures include imposing tariffs on goods, curbing imports or exports through quotas or licenses, and restricting access to lucrative public tenders in the EU, which are valued at approximately 2 trillion euros annually.
Potential actions could involve excluding U.S. companies from bidding on construction or defense contracts if more than half of the contract involves U.S. goods or services. Alternatively, the EU might adjust bid evaluations to penalize U.S. offers.
The ACI also allows for measures targeting services where the U.S. holds a trade surplus with the EU. This could impact digital service providers like Amazon, Microsoft, Netflix, or Uber. Further measures might restrict foreign direct investment from the United States, which is currently the largest investor in the EU.
Other possible actions include limiting the protection of intellectual property rights, restricting access to financial services markets, and imposing hurdles on the sale of chemicals or food products within the EU.
The primary goal of the ACI is to select measures most effective in stopping coercive behavior and repairing any injury caused by such actions. The EU hopes that the mere consideration of these measures will encourage a resolution before any escalation occurs.
An EU diplomat commented, “We prefer negotiation to confrontation, but we are prepared to use all tools at our disposal to protect our interests.”
