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EU prepares to hit big tech companies in retaliation for Trump tariffs

Politiko 2025-02-05 15:18:58

The European Union is planning to hit Silicon Valley with retaliatory measures if President Donald Trump follows through on threats to impose tariffs on the bloc. The European Commission is seeking to use its “anti-coercion instrument” (ACI) in a potential dispute with Washington, two officials with knowledge of the plans said, which would allow the EU to target U.S. service industries such as Big Tech.

The tool, which was drafted during Trump’s first term and later used as a deterrent against China, allows the EU’s executive arm to impose restrictions on trade in services if it determines that a country is using tariffs on goods to force policy changes. Trump’s threat to use tariffs to force Denmark to hand over Greenland and pressure the EU to lift enforcement measures against U.S. technology companies would qualify, officials said.

The ACI allows the bloc to choose from a wide range of retaliatory measures, such as revoking protection of intellectual property rights or their commercial exploitation, software downloads and streaming services. It also allows the EU to block foreign direct investment or restrict market access for banking, financial and insurance services groups.

Trump said last week he would "absolutely" impose tariffs on the EU, citing Brussels' action against US technology companies and the country's large trade deficit in goods. He did not provide details on when the measures would be enacted or whether the bloc could negotiate a deadline, as Canada and Mexico have secured.

Trade Commissioner Maroš Šefčovich said he wanted to negotiate a way to avoid tariffs, but added: “If we are hit, we will react decisively.” Šefčovic noted that the bloc had a large deficit with the US in services even though it enjoyed a surplus in goods.

Any retaliation would have to be proportionate and the commission would have to provide evidence of harm to EU industries. It would also need to seek approval from at least 15 of the 27 member states. Consultations could take several weeks; the last retaliatory tariffs imposed on the US in 2018 took three months to be approved.

In contrast, Canada and Mexico announced retaliatory measures last week within hours of Washington's decision to impose tariffs of up to 25%. Trump then suspended the tariffs on both countries in exchange for commitments to crack down on immigration and drug trafficking.

In March 2018, Trump imposed tariffs of 25% on steel and 10% on aluminum. It took the EU three months to adopt its own retaliatory measures on 2.8 billion euros of US goods. An EU diplomat said the bloc could quickly head into a crisis, adding: “Look at our response to the Russian invasion of Ukraine or the Covid pandemic.” / Monitor