For two years, the European Union (EU) sat on a weapon it had never fired.
The Anti-Coercion Instrument, a trade enforcement tool launched in December 2023, was designed to shield Europe from economic bullying by hostile powers.
Then, on January 17, 2026, Donald Trump changed the game.
By threatening 10% tariffs on eight NATO allies starting February 1, escalating to 25% by June unless Denmark surrenders Greenland, Trump provoked a tariff standoff.
He became the first actor to force Europe’s hand on a tool built for exactly this scenario.
What started as a playbook designed for China now faces its real-world test, against a military ally.
The question hanging over Brussels: can a legal mechanism stop a determined president willing to weaponize trade?
How the EU’s trade Bazooka works
The Anti-Coercion Instrument operates like a carefully engineered legal machine, designed to remove the paralysis that once plagued EU trade responses.
Traditionally, imposing tariffs required unanimous consent from all 27 member states, a system that handed individual nations a veto and often froze Europe’s ability to respond to external pressure.
The Anti-Coercion Instrument (ACI )dismantled that structure.
When a third country deploys trade or investment measures to coerce an EU policy shift, the European Commission initiates a formal four-month examination to determine whether “economic coercion” has occurred.
The threshold operates as an external pressure designed to force a political outcome, rather than merely causing commercial harm.
Trump’s conditional tariff threat meets this standard: the tariffs are explicitly contingent on Denmark ceding Greenland, a sovereign decision.
If the Commission concludes that coercion exists, it presents its findings to the Council of the European Union, where member states vote using qualified majority rules, a threshold requiring 55% of member states to represent 65% of the EU’s population.
This architecture is critical. Unlike traditional trade votes, no single nation can block action.
This removes the structural veto power that China exploited for years and that smaller EU members feared would paralyze responses to future threats.
Once a qualified majority confirms coercion, the Commission enters a negotiation phase, typically lasting weeks.
If diplomacy fails, the EU can deploy an arsenal of response measures.
These include tariffs on US goods, restrictions on services trade where the US runs a structural surplus, public procurement bans that lock American firms out of billions in EU contracts, limits on foreign direct investment in strategic sectors, and even intellectual property freezes.
The entire response window spans roughly four months for investigation, plus eight to ten weeks for voting.
The timeframe matters because it signals a credible threat.
Unlike ad hoc retaliation, the ACI’s structured process telegraphs both resolve and legal grounding, the kind of commitment that can deter escalation before the first shot is fired.
Trump and the Greenland calculus: Does deterrence beat deployment?
Trump’s tariff threat unambiguously meets the ACI’s legal threshold for coercion, external pressure designed to alter a member state’s policy choice.
Yet that legal clarity masks a political paradox: the instrument’s real power may lie in the threat of deployment, not actual activation.
European policymakers understand this distinction.
French President Emmanuel Macron has publicly called for the ACI’s activation, signaling that Europe will no longer tolerate coercive tariffs from any power.
German Vice-Chancellor Lars Klingbeil echoed the urgency, declaring that “Europeans must make clear the limit has been reached” and that Europe should “examine and use” its “legally established toolbox”.
Former EU Commissioners Paolo Gentiloni and Cecilia Malmstrom, both with decades of trade negotiation experience, have backed activation as a credibility signal.
But here lies the strategic trap: actually firing the bazooka could hurt Europe as much as Washington.
If the EU imposes restrictive measures on US services or public procurement, it risks freezing the trade deal reached between Trump and the bloc in July 2025.
An escalation spiral could collapse months of negotiation, hurting both sides’ tech firms, financial services, and industrial exporters.
Which sectors would hurt most if the ACI were activated?
The US maintains a roughly $89 billion services surplus with the EU annually, concentrated in digital services, cloud infrastructure, software, and financial technology.
American giants like Apple, Microsoft, Google, and financial platforms could face restricted market access and heightened regulatory scrutiny under the EU’s Digital Services Act and Digital Markets Act.
The EU could also weaponize its General Data Protection Regulation (GDPR) to restrict data flows or impose IP barriers on US firms.
For Trump, the calculus is asymmetric. The US runs trade deficits with Europe, so restricted EU market access matters less to American exporters than vice versa.
Yet the broader geopolitical message matters enormously.
If Europe activates the ACI against a NATO ally over an acquisition demand, it signals to China, Russia, and other competitors that the bloc will defend its members even against superpower pressure.
Conversely, if Europe backs down after threatening the bazooka, it undermines its credibility with both allies and adversaries.
The €93 billion retaliation package already prepared by the EU offers a middle ground, a counter-tariff threat without deploying the full ACI apparatus.
This targets Boeing aircraft, American automobiles, bourbon, and other US goods, imposing pain on Trump’s political base while preserving the transatlantic deal framework.
Yet this option, while widely supported, may not suffice if Trump escalates to the 25% tariff in June.
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