Trump Tariffs: Why Europe Holds Its Trade ‘ Bazooka’ but Hesitates to Pull the Trigger

Europe finds itself in a dilemma over whether to respond to Trump’s tariffs with its trade ‘bazooka.’ In a tense climate, Brussels is considering activating trade countermeasures against Washington’s aggressive trade policy following Donald Trump’s announcement of massive tariffs. However, it seems that while Europe has a trade ‘bazooka’ at hand, it cannot yet agree on pulling the trigger. Beyond a carefully crafted message for a ‘proportional’ and ‘united’ response from all EU trade ministers during their meeting in Luxembourg on Monday (07.04.2025), Politico notes that the question of how to respond to Trump’s trade punch threatens to open rifts in the fragile unity of the bloc. The ‘carrot’ offered by the EU to the US is a zero-for-zero tariff system for industrial products including automobiles, pharmaceuticals, chemicals, plastics, and machinery. The ‘stick’ is the sense the EU wants to create that it is negotiating from a position of strength, hoping that the turmoil in financial markets caused by Trump’s tariffs will weaken his confrontational intent. However, EU capitals are divided over which exact stick to use. According to Politico, the EU has the ‘nuclear option’ of the Anti-Coercion Instrument (ACI), which would empower the EU executive to target American services like technology and banks. Given the impending reciprocal 20% tariff on all EU products alongside existing 25% tariffs on steel, aluminum, and cars, the bloc of 27 is not ready to activate its bazooka. Such a move, as one minister put it, would mean the bloc is truly in a trade war. The products targeted by EU countermeasures include soybeans, sweet potatoes, rice, almonds, orange juice, tobacco, iron, steel, aluminum, certain boats and vehicles, textiles, clothing, and various makeup items. The total amount of affected US exports will reach €22.1 billion based on 2024 EU import data. Several countries pressured to remove items like Kentucky bourbon from the initial target list, marking a win for France, Ireland, Italy, and Spain.