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Europe one step closer to the “trade bazooka” against the U.S. over Greenland – France and Germany converge, Meloni’s role crucial

European leaders are hardening their stance toward Donald Trump’s threats over Greenland and are calling on the European Commission to prepare the EU’s most powerful trade instrument – The Anti-Coercion Instrument and tariffs on U.S. products worth €93 billion are on the table

Newsroom January 21 12:46

European Union leaders are moving toward a more aggressive and coordinated response to the United States, as concern grows over Donald Trump’s threats regarding Greenland and the imposition of tariffs on European countries that oppose his policies.

As reported by Politico in an analysis citing diplomatic sources, Germany is now aligning with France in urging the European Commission to consider activating the EU’s most powerful trade weapon, the Anti-Coercion Instrument (ACI), ahead of the emergency EU summit in Brussels on Thursday evening.

The Anti-Coercion Instrument is regarded as one of the EU’s strongest pressure tools, as it allows for the imposition of tariffs, restrictions on exports of strategic products, or even the exclusion of U.S. companies from public procurement tenders. Its use, however, requires the support of at least 15 member states in the EU Council and is expected to have significant repercussions for the European economy.

Berlin’s shift brings the EU closer to a hard-line stance toward Washington, as the escalating rhetoric of the U.S. president over Greenland has led key European capitals to conclude that the Union must prepare for all scenarios. “The determination has been there for a few days now,” a European diplomat said, noting that a broad consensus is forming that “all tools must be on the table.”

A decisive factor in the requests governments will make of the Commission is expected to be Donald Trump’s speech at the World Economic Forum in Davos on Wednesday. Despite efforts by European leaders to meet him on the sidelines of the forum in order to dissuade him from imposing tariffs, Brussels is preparing for the scenario in which his threats are carried out.

Last Saturday, Trump announced his intention to impose 10% tariffs on NATO allies that opposed his moves on Greenland, including France, Germany, Denmark, the Netherlands, the United Kingdom, Norway, Sweden and Finland. He then escalated further, threatening 200% tariffs on French wine and champagne.

Beyond the Anti-Coercion Instrument, European leaders are also considering activating an already prepared retaliation package providing for tariffs on U.S. exports worth a total of €93 billion. According to diplomatic sources, these tariffs could be imposed first, while the Commission simultaneously initiates the more complex and time-consuming process of activating the ACI.

The convergence between Paris and Berlin reflects the shifting balance within the EU. “There is convergence with the Germans, an awakening that we must stop being naïve,” a senior French official said, noting that French President Emmanuel Macron has long supported the use of the “trade bazooka.” By contrast, other capitals remain more cautious, due to the risk of further retaliation by Trump and the cost to European economies.

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In Berlin, however, the view appears to be gaining ground that only a strong deterrent response can prevent a full-scale trade war with the United States. “We have a range of tools at our disposal and we agree that we do not want to use them. But if necessary, we will use them,” German Chancellor Friedrich Merz said on Monday.

Diplomats believe that Italy’s stance will also be crucial, under Prime Minister Giorgia Meloni, who maintains good relations with Trump. While Rome currently favors de-escalation through dialogue, the alignment of France and Germany is increasing pressure on both Italy and Poland to fall in line with the rest of the Union.

At the same time, Germany’s industrial sector appears to be playing a key role in shaping Berlin’s position. The president of the German Engineering Federation (VDMA), Bertram Kawlath, called on Brussels to seriously consider activating the Anti-Coercion Instrument, despite noting that European industry has already been disproportionately hit by U.S. tariffs.

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