EU moves closer to using its trade bazooka against the US

BRUSSELS — EU leaders have toughened their position and want the European Commission to ready its most powerful trade weapon against the U.S. if Donald Trump doesn't walk back his Greenland threats.

Germany has joined France in saying it will ask the Commission to explore unleashing the Anti-Coercion Instrument at the emergency EU leaders' summit in Brussels on Thursday evening, according to five diplomats with knowledge of the situation.

Berlin's move brings the EU closer to a more forceful response, with Trump’s escalating rhetoric about the Danish territory and its supporters having prompted key capitals to harden their stance on how Europe should react.

“The resolve has been there for a few days,” said one of the diplomats. “We have felt it in our bilateral talks ... there is very broad support that the EU must prepare for all scenarios, and that also includes that all instruments are on the table.”

What governments request of the Commission will be decided largely by what the U.S. president says in his address at the World Economic Forum in Davos on Wednesday. While several European leaders have been trying to arrange meetings with Trump on the Davos sidelines to talk him down from imposing the tariffs, they are also preparing for the possibility that Trump follows through on his threats.

Trump on Saturday announced he would slap a 10 percent tariff on NATO allies that have opposed his move to take Greenland, including France, Germany, Denmark, the Netherlands, the U.K., Norway, Sweden and Finland. The U.S. leader has since escalated further, threatening a 200 percent tariff on French wine and Champagne.

Aside from the anti-coercion tool, or "trade bazooka," leaders have also discussed using an earlier retaliation package that would impose tariffs on €93 billion worth of U.S. exports. Two of the EU diplomats indicated that it is possible to impose the tariffs first, while the Commission goes through the more cumbersome process of launching the powerful trade weapon.

“There is a convergence with the Germans, there’s an awakening on their part, that we have to stop being naive,” said a senior French official, referring to using the bazooka against Washington. French President Emmanuel Macron has championed the move, but other capitals have been more cautious given the risk it could trigger further measures from Trump, as well as the potential costs to their economies. 

The thinking within the German government appears to be that in order to avoid a full-blown trade war with the U.S., the bloc needs to get a strong deterrent in place.

"We have a set of instruments at our disposal, and we agree that we do not want to use them. But if we have to use them, then we will," German Chancellor Friedrich Merz told reporters on Monday.

The trade weapon is one of the EU’s main levers against the U.S. because it includes a wide range of possible measures such as imposing tariffs, restricting exports of strategic goods, or excluding U.S. companies from tenders. A decision to use the instrument would not be taken lightly because it would have a significant impact on the EU economy.

The last time the EU considered using its bazooka against the U.S. — when Trump slapped unilateral levies on the bloc in 2025 — Europe stepped back from the brink. This time, member capitals have a higher tolerance for pain, the EU diplomats indicated. 

“It’s a very different situation to last summer, when it was just a trade dispute,” one of the diplomats said. “Countries said they don’t want to engage in a dispute over whether tariffs should be 10 or 15 percent, particularly when we’re dependent on the U.S. ​​But we are not in the nice-to-do territory now, we are in the need-to-do territory.”

Pulling the trigger on the ACI would require the support of at least 15 countries in the Council of the EU.

Diplomats hope that Trump ally Giorgia Meloni will also get on board. As the EU’s third-biggest country, Italy's joining the push would be an important display of unity, they said.

For now Rome has indicated it would prefer to continue de-escalatory talks with Washington, while the position of fellow potential ally Poland is still unclear. However, with France and Germany’s positions converging, pressure on Rome and Warsaw to fall into line with the rest of the bloc will be intense.

Key to the evolution of Germany’s position on hitting back at Trump is buy-in for such a move from industry.

Bertram Kawlath, president of the VDMA German machine builders’ association, called for Brussels to consider using the anti-coercion tool, despite the fact that the European mechanical industry is “already disproportionately affected by the U.S. tariffs.” 

Giorgio Leali contributed reporting.