In the escalating trade war with the US, European authorities are debating the challenges of obstacles regarding importing US services with big technology and trade weapons that allow the bloc to place restrictions on Wall Street.
European Commission President Ursula von der Leyen said this week that he “has the power to push back.”
President Trump has already announced tariffs on aluminum, steel, automobiles and auto parts, and has announced moves that could seriously hinder the Bloc's volatile economy. Brussels responded by announcing it would re-impose taxes on US imports, including Harley-Davidson motorcycles, whiskeys and other goods.
To combat Trump's latest mutual tariffs, European authorities are deploying policy tools called “bazookas,” called some people. Instruments adopted and never used to be attacked by China in 2023 are considered last resort options if talks with the Trump administration go south.
Brussels can adapt the tool Follow the American tech giants and financial institutions. External plans that have been in circulation in recent weeks include nuclear options. Restricting access to the EU's vast public procurement markets means partially cutting off the banks from projects worth around 2 trillion euros ($2.2 trillion) each year.
Another idea of ​​a reserve plan is to target the large amounts that Europeans invest in American companies each year. This is the annual flow of around 300 billion euros, which has been a stimulating point for EU officials. And finally, in the preliminary plan, Brussels “may increase tax and regulatory pressure on American digital platforms.”
The plan did not clarify the scope, not to mention which proposal would be introduced. But it showed how broadly policymakers think because the block is the weight of its approach.
“Personally, I think big bazookas should be used as deterrents first,” said Fabrizio Pagani, a partner at investment bank Vitale and a former top economic officer in the Italian government. “So let's put it on the table and negotiate.”
European Commission spokesman Olof Gill said the anti-forced goods instruments are believed to be Brussels plotting negotiation strategies. The point is that the European Union has acquired a large trade surplus in its goods, but at the same time it has accumulated a trade deficit of around 110 billion euros in its services with the US. Abusing that point could be key to negotiations, the advisor says.
However, some analysts and economists are worried that such a hard-line negotiation could backfire.
“Like tariffs on goods, tariffs on services have hit consumers and businesses directly,” said Joachim Kumem, the Strategy Director at investment bank Panmur Liberam, adding that it will be a surefire way to escalate the trade war.
“You're just fueling the bull's fire,” he added.
