EU prepares for trade war: Trump's tariffs bring new risk!

US President Donald Trump announced new tariffs on all countries on April 2, 2025, including 20 percent on goods from the EU. This decision demonstrates the US government's continued desire to take protectionist measures that could have a direct impact on international trade. The EU is responding to these developments with a newly developed strategy aimed at counteracting economic pressure.

In December 2023, the Anti-Coercion Instrument (ACI) was introduced, an important tool for the EU to restrict trade with states that threaten Europe. The conditions for the use of this instrument are that trade or investments are affected. The ACI allows the EU to limit trade, particularly with the USA. A necessary process involves negotiations with the third country, and after six months without successful talks, the EU can take measures requiring the consent of at least half of the member states.

Planned EU actions and responses

Possible measures the EU can take include increasing tariffs, excluding companies from public contracts, and stopping or limiting exports and imports. The ACI was originally conceived as a response to China's aggressive economic policies and is now also being considered as an option against the US. Despite the threat of application of the ACI, it has not yet been used because the Trump tariffs are intended to protect the US market. However, there are signs that the EU sees the measures as an interference with its economic decision-making capacity. Whether the EU will actually use the ACI against the USA remains to be seen.

As the EU prepares for these challenges, the need for additional tools to address increasing trade tensions has become clear. The EU is seen as a key player in global trade that can create wealth and jobs. In this context, the ACI will then help manage trade restrictions imposed by countries to exert unfair influence on EU policies, such as in the case of Lithuania, which was punished by China through trade restrictions in 2021.

European legislation regarding the ACI was adopted between the European Parliament and the Council on June 6, 2023, and final approval by MEPs took place on October 3, 2023. The instrument could, as a last resort, allow the EU to introduce countermeasures, including trade and investment restrictions, and ultimately contribute to conflict resolution through negotiations, such as the European Parliament reported.