Berlin/Brussels – A deepening rift has emerged within the European Union’s leadership over how to respond to U.S. President Donald Trump’s latest tariff threats. While German Chancellor Friedrich Merz is urging restraint and dialogue, French President Emmanuel Macron is leading a push for immediate, aggressive economic retaliation using the EU’s powerful “Anti-Coercion Instrument.”
The transatlantic diplomatic crisis erupted on Saturday when President Trump threatened to impose a 10% tariff on all goods from eight European nations, including Germany, France, and the UK, beginning on February 1. The tariffs, which Trump said would rise to 25% by June, are explicitly linked to his demand that Denmark sell the autonomous territory of Greenland to the United States.
A Tale of Two Strategies
Chancellor Merz, speaking at a press conference in Berlin on Monday, cautioned against a knee-jerk reaction that could spiral into a full-blown trade war. Merz emphasized his intention to meet President Trump personally at the World Economic Forum in Davos this Wednesday to seek a diplomatic resolution.
“We simply want to try to resolve this problem together,” Merz stated. However, he added a firm caveat regarding the bloc’s capabilities: “The American government knows that we could also retaliate. I don’t want to, but if necessary, we will of course protect our European interests.”
In stark contrast, French President Emmanuel Macron has advocated for a swift and forceful response. Macron has urged the EU to activate its Anti-Coercion Instrument (ACI)—informally known as the “trade bazooka.” This tool, established in late 2023, allows the bloc to impose wide-ranging sanctions, including tariffs, investment restrictions, and limits on public procurement access, against foreign powers attempting to economically blackmail member states.
Macron has drawn sharp parallels between Trump’s pressure tactics and authoritarian aggression, telling allies that such tariff threats are “unacceptable” among NATO partners.
The Trigger: Greenland and Security
The dispute centers on President Trump’s renewed and intensified efforts to acquire Greenland for the construction of a “Golden Dome” missile defense system. Trump justified the tariff threats by citing the refusal of European allies to entertain the sale and their recent deployment of troops to the island—a move he described as hostile to U.S. national security interests.
The threatened nations—Denmark, Norway, Sweden, Finland, the Netherlands, Germany, France, and the UK—issued a joint statement on Sunday expressing “full solidarity” with Denmark and rejecting the coercion.
The Stakes for Europe
The economic implications are severe. Markets have already reacted nervously, with European stocks dipping and gold prices hitting record highs on Monday.
The EU is currently weighing two primary retaliatory options:
- The Anti-Coercion Instrument (ACI): This would require a qualified majority vote from member states. It is the strongest weapon in the EU’s arsenal but has never been used.
- Frozen Tariffs: The bloc could unfreeze a retaliatory package targeting €93 billion ($108 billion) of U.S. goods, originally prepared during a trade dispute last year and set to expire on February 6.
What Comes Next
All eyes are now on the Swiss ski resort of Davos, where Chancellor Merz, President Macron, and European Commission President Ursula von der Leyen are scheduled to cross paths with President Trump.
Following the Davos interactions, EU leaders will convene for an emergency summit in Brussels on Thursday to finalize their collective response. The outcome will likely depend on whether Merz’s preference for de-escalation can bridge the gap with Macron’s demand for deterrence, determining the future of the transatlantic alliance.
Sources
- Fortune: EU could fire ‘trade bazooka’
- Euronews: Pressure grows for EU to deploy trade bazooka
- France24: Macron wants EU anti-coercion instrument
- Kyiv Independent: Europe hits back at Trump tariff warning
- USA Today: EU mulling ‘trade bazooka’
- France24: What is the EU anti-coercion ‘bazooka’
- Times of Israel: Trump’s Greenland tariffs spark calls for countermeasures
