What the EU’s ‘trade bazooka’ is and how it works

BRUSSELS (AP) — Rattled by U.S. President Donald Trump’s threats over Greenland, the European Union is readying countermeasures against the United States.

As primarily a trading bloc, the EU’s toolkit is mostly financial instruments, from steep tariffs on U.S. goods to the so-called trade bazooka touted by French President Emmanuel Macron. So far, most of the 27 EU nations remain skeptical about using it.

What is the ‘trade bazooka’?

The term is shorthand for the bloc’s Anti-Coercion Instrument, which includes a raft of measures for blocking or restricting trade and investment from countries found to be putting undue pressure on EU member nations or corporations.

The measures could include curtailing the export and import of goods and services, barring countries or companies from EU public tenders, or limiting foreign direct investment. In its most severe form, the bazooka would essentially close off access to the EU’s 450-million customer market.

The bazooka could inflict billions of dollars of losses on U.S. companies and the American economy.

Why was the Anti-Coercion Instrument created?

The ACI was established by the European Commission in 2021 after China restricted trade to Lithuania over its ties with Taiwan, which is claimed by Beijing as its own territory.

“The primary objective of the ACI is deterrence. The instrument will, therefore, be most successful if there is no need to use it,” according to a commission statement issued before the dispute over Greenland.

Could the EU impose the ‘trade bazooka’ quickly?

It would take at least six months to activate the ACI.

How much trade is there between the US and the EU?

The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.

Europe’s biggest exports to the U.S. are pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. Among the biggest U.S. exports to the bloc, meanwhile, are professional and scientific services like payment systems and cloud infrastructure, oil and gas, pharmaceuticals, medical equipment, aerospace products and cars.

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Associated Press writer Sylvie Corbet in Paris contributed to this report.