Will the European Union draw its “bazooka” to counter the commercial attacks from the United States? Since 2023, the 27 has had legislation which allows them to reply with force when a third country instrumentalizes the commercial tool to tear off concessions. If the United States implements its threat of imposing generalized customs duties, this “anti-coercion regulations” could be used for the first time.
Donald Trump has indeed promised a “liberation day” for Wednesday, April 2, when the American president is expected to launch a new large offensive against European exports. Already struck by 25 % taxes on steel and aluminum, Europeans now know with certainty that their cars will be affected from April 3. But the American president may go even further. In reality, all their exports of goods to the United States – the equivalent of 503 billion euros in 2023 – could be affected!
“Nothing is ruled out”
“It will stir,” worries a diplomat. Faced with this major threat, Brussels wants to calibrate the response. Carrot or stick? To coax the American administration, the European Commission is preparing a list of subjects on which negotiations are possible. The chief of staff of Ursula von der Leyen and the European Commerce Commissioner were in Washington earlier this week. But in parallel, senior officials and diplomats also debate a more muscular response.
So far, in order to avoid climbing, Europeans have responded to American attacks by announcing customs duties in an equivalent amount. By virtue of this “eye for an eye, tooth for tooth”, the European Commission must unveil on April 13 the list of American products which will be targeted – in return for taxes on steel and aluminum.
To reply to the 25 % tax on cars, Brussels could decide to go a notch further, by invoking legislation adopted in 2021 which allows to attack the service sector, and therefore to the American digital giants, but also to restrict the access of American companies to public procurement. According to the Financial Timesthis could make it possible to exclude Elon Musk’s Starlink system from tenders launched by European governments in order to secure their internet connections via satellites. “Nothing is ruled out,” a spokesman for the German government on Friday.
“Nuclear weapon”
There remains, as a last resort, the famous anti-coercion regulations, which some call squarely “nuclear weapons”. No one knows with certainty what he will say next Wednesday during his “Liberation Day”, but the American president recently attacked the very principle of VAT and he also regularly denounces European regulations on digital giants. A change of scale. “With these attacks, we are very directly out of customs duties imposed for economic reasons to enter the field of economic coercion,” said Elvire Fabry, researcher at the Jacques Delors Institute.
In this configuration, the European Union could trigger this famous anti-coercion tool. Or a set of shock measures that can be accumulated: punitive customs duties, restrictions on American investments, end of access to data from Europeans with which American digital companies feed, even the introduction of health standards preventing agricultural products Made in USA to enter European territory.
Deterrent above all
Originally, this instrument was planned to stand up to China, which, at the end of 2021, had restricted the exports of Lithuania in retaliation for the rapprochement between the Balte and Taiwan country. To be activated, it requires a decision of the European Commission as well as the agreement of a qualified majority of the countries of the Union. It takes a minimum of four months for the measures to be adopted. A period of time that Europe can take advantage of to negotiate. “This instrument is a big gourdin, designed above all as a deterrent, specifies Elvire Fabry. He is useful in the face of a president who only respects strength.”
However, “it must be handled with care, nuances a European source. In Brussels, there are hesitations, due to the risk of climbing”. The Commission intensively consults the capitals to ensure that they have sufficient support.
As so many jobs are at stake, will Europeans succeed in blocking Brexit’s time in front of the British? Not sure … The Germans are already worried about their automotive industry and the French for their wines and champagnes. “The coming weeks are likely to be a moment of truth for the unit of the 27”, predicts a diplomat.
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