economy
January 19, 2026
What are Trump’s latest tariff threats and could EU hit back with ‘big bazooka’?
Europe could use powerful but untested law amid pressure over Greenland – but it could also lose out from a trade war
TL;DR
- Donald Trump threatened punitive US import tariffs on eight European countries if they refuse to allow the US to purchase Greenland.
- The EU is considering deploying its "big bazooka" anti-coercion instrument (ACI) to counter Trump's threats.
- The ACI allows the EU to impose sweeping trade sanctions on countries engaging in political bullying or trade blackmail.
- Some EU leaders, like France, are pushing for the ACI's deployment, while others, like Germany, are more cautious.
- The EU is waiting to see if Trump will reverse his threats, similar to past instances, and is also awaiting a US Supreme Court ruling on tariffs.
- Retaliation options for the EU include using the ACI or reactivating previously suspended levies on US goods.
- A trade war could negatively impact global GDP, with estimates suggesting a 0.3% drag.
- Experts are hopeful that the Supreme Court ruling or domestic US opposition might deter Trump's actions.
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