Europe mulls counter-tariffs, ACI against the U.S. amid Greenland crisis

European states are reportedly considering retaliatory tariffs and broader punitive economic countermeasures against the United States after President Donald Trump deepened the dispute over Greenland by threatening new export taxes.

Trump announced on Saturday that if an agreement is not reached, eight European countries will face tariffs starting from 10% on February 1 and increasing to 25% on June 1. Letting Washington take GreenlandMineral-rich island, semi-autonomous region of Denmark.

The proposed tariffs will target Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland. The duties will be on top of existing export tariffs to the US, which currently stand at 10% for the UK and 15% for the EU.

Regional diplomats held an emergency meeting in Brussels on Sunday afternoon to discuss their response to Trump’s threat to raise tariffs; France was reportedly pushing for the EU to use the “Anti-Coercion Instrument” (ACI), its strongest economic counterthreat to the United States.

This much-lauded tool is seen as a nuclear option when it comes to economic countermeasures, as the EU restricts US suppliers’ access to the EU market, excludes them from participation in public tenders in the bloc, imposes export and import restrictions on goods and services, and places potential limits on foreign direct investment in the region.

Although it has been seen as a “big bazooka” to counter Trump’s tariff tactics, it has not been used before and regional leaders have already said they want to resume dialogue with the United States in the coming days to resolve the dispute over Greenland.

The Financial Times reported that the EU is considering this issue. Imposition of customs duties worth 93 billion euros ($108 billion)Also considering the use of ACI.

Meanwhile, Reuters reported that the European Parliament will probably suspend its work on this issue. EU-US trade agreement He was shot last July. Parliament was due to vote on January 26-27 on repealing many EU import duties on US goods, but that approval may be delayed. Reuters reported.

While France is more enthusiastic about ACI, Germany is among the countries that have previously hesitated to use it.

“The key question to watch is whether the EU will try to keep the conflict limited to such a more ‘classic’ trade war, or whether calls for a tougher line will be valid,” Carsten Nickel, Deputy Research Director at Teneo, said in an emailed comment. he said.

“France, representing the second party, called on its partners to officially activate the EU’s so-called anti-repression instrument… [but] “Other EU member states, including Germany, will likely remain cautious.”

Nickel stated that the reasons for this divide are multifaceted; This includes factors such as France traditionally advocating a more independent European role in continental security and being less dependent on exports than other countries such as Germany.

European leaders reacted quickly to Trump’s surprise tariff threat; British Prime Minister Keir Starmer said on Saturday that “it is completely wrong to impose tariffs on allies to ensure the collective security of NATO allies,” while French President Emmanuel Macron also said he described them as “unacceptable”.

However, leaders are expected to use this week’s World Economic Forum in Davos, Switzerland, as an opportunity to speak with Trump, who spoke at the forum on Wednesday.

Economists warn that this spring will be dominated by similar thorny debates over Greenland, just as last year saw months of wrangling between the U.S. and the EU before a trade deal was signed.

“My basic situation is this: February 1st [tariffs] “The deadline will be postponed as diplomatic measures are implemented,” Mohit Kumar, Jefferies’ chief European economist, told CNBC on Monday.

“However, I think this is different from the regular TACO [Trump Always Chickens Out] trade. Europe’s stance on Greenland is very clear: it is not for sale and they will not tolerate aggression… But what Trump has shown is that he wants Greenland. I don’t understand how the problem can be solved in such a short time. “So we face months or potentially quarters of uncertainty around tariffs.”

“This is negative for Europe. Growth will decline,” he warned, ahead of a wild market day for European shares on Monday, when regional indices looked set to fall at the open.