European officials call it their bazooka: a potential bloody retaliation to Washington’s tariffs that targets the most vulnerable US industry — tech.
The bazooka’s official name is the Anti-Coercion Instrument. It entered into force in December 2023 and provides the European Union with potent weapons to counter third-country “coercion.” Adopted initially to respond to threats from China, it could be used against the US.
Europeans still would prefer a negotiated settlement to an all-out trade war. A day after the Trump Administration reversed course and backed down on most of the most punishing global levies, the bloc paused its retaliatory tariffs on US imports for 90 days in order “to give negotiations a chance,” said Ursula von der Leyen, president of the European Commission. But she warned that the tariffs would take effect if talks “are not satisfactory.”
It’s important to note what did not change – 10% US tariffs on all European exports and 25% on steel, aluminum, and automobiles. In their best scenario, European leaders believe that the costs of US tariffs will rebound onto American businesses and households, forcing Trump to reverse course permanently. Shares of leading Silicon Valley companies plummeted after the initial announcement of massive US tariffs. They soared on news of the Trump tariff “volte face”. The European preference would be for a negotiated “zero-for-zero” approach, eliminating tariffs on all US goods if Washington did the same.
In the worst scenario of an escalating transatlantic trade war, the EU is loading its weapons. Europe “holds a lot of cards, from trade to technology to the size of our market,” von der Leyen said after the initial announcement of US tariffs. “This strength is also built on our readiness to take firm countermeasures. All instruments are on the table.”
If Europe fires the Anti-Coercion bazooka, the casualties could be enormous. European regulators could pull the plug on Elon Musk’s X, restrict intellectual property rights, and prevent US tech companies from bidding on public contracts or even from investing in the EU. Specific targets could include app stores, cloud services, and other areas where data is stored. The retaliation could extend beyond tech, including new taxes on US banks and other service industries.
Services represent a US strength — turning them into a vulnerable target. The US is the EU’s top commercial partner, with total trade in goods and services exceeding €1.5 trillion in 2023. Although the Trump Administration targets the US’s large deficit in physical goods with the bloc, which amounted to some €157 billion in 2023, the US enjoyed a €109 billion surplus in services, thanks to tech, intellectual property, and financial services.
But it would be costly for Europe to close the door on US tech, not to mention American pharmaceuticals and financial services. Europe has no easy substitutes for Amazon, Google, or Microsoft cloud computing, Open AI’s artificial intelligence wherewithal, or Netflix-style streaming services. From this perspective, Europe’s Anti-Coercion bazooka resembles a nuclear weapon — difficult to drop.
So far, the EU has only targeted physical products, preparing to impose tariffs on US goods ranging from orange juice, poultry, soybeans, and Harley Davidson motorcycles. These products come in large part from Republican districts and the Europeans hope to convince Republican members of Congress to temper Trump. After lobbying from France, Italy, and Ireland, which feared additional US tariffs on their beverages, Brussels officials removed wine and whiskey from the list.
Enforcement of Europe’s new tech regulations is also moving forward. The Commission recently found Google and Apple guilty of breaking the new Digital Markets Act, which targets their market dominance. Fines are expected to be announced, though European officials suggest they will be modest. The Trump Administration lambasts the European tech regulations as an “unfair tax.”
It will take additional aggressive US actions before the EU unleashes a full-scale offensive against American tech. The Anti-Coercion instrument has never been used, requiring 15 of 27 EU members to approve. It would take around eight weeks of preparation and consultations before being unleashed. That’s a high hurdle.
Europeans also look divided on how to proceed. France and Germany have been calling for a forceful response; some have advocated using the new weapon against US tech. But other European leaders have been more reluctant. The Italian prime minister, Giorgia Meloni, has called the idea that Italy must choose between the United States and the bloc “childish” and cautioned against harsh retaliation.
An olive branch or a bazooka? For Europe, it’s a tough choice.
William Echikson is a Non-resident Senior Fellow with the Tech Policy Program and editor of the online tech policy journal Bandwidth at the Center for European Policy Analysis (CEPA).
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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