Interesting developments are unfolding between the European Union and the United States! The situation has escalated to the point where EU leaders are proposing to "hit Silicon Valley with a bazooka." So, investors are braced for a major upheaval!
According to the Financial Times (FT), the EU’s response to President Donald Trump’s tariffs could target US high-tech companies. If the White House follows through on its tariff threats against the EU, the region may have no choice but to retaliate against Silicon Valley’s tech giants.
The EU authorities are poised to activate the Anti-Coercion Instrument (ACI), a mechanism designed to counter economic coercion from other countries. The ACI has been nicknamed the "bazooka" due to its severe retaliatory measures. The first targets of this economic weapon could be US tech giants.
The Financial Times reminds us that the ACI is one of the EU’s most powerful trade defense tools, yet it remains fully compliant with international law. The ACI was initially developed during Trump’s first term as a means to protect the EU from economic blackmail. If EU lawmakers conclude that a country uses tariffs as a form of coercion, the European Commission can impose restrictive measures in response.
The ACI allows Brussels to impose a broad range of countermeasures, including revoking intellectual property protections for US firms, blocking foreign direct investments (FDI) from the US into the EU, and restricting market access for American banks, insurance firms, and financial institutions.
High-ranking EU officials overwhelmingly back the idea of using the ACI against the US. French Trade Minister Laurent Saint-Martin emphasized that the EU must act quickly and decisively. “Speed is our advantage. The EU needs to be ready faster than last time. Besides speed, unity is also crucial," the minister said.
European Commission President Ursula von der Leyen confirmed that Brussels has already prepared for US tariffs on European imports. While the EU remains open to negotiations, Brussels is determined to pursue a pragmatic strategy in protecting its economic interests.
