What is the ‘trade bazooka’?

As US President Donald Trump has consistently threatened to acquire Greenland, the European Union is planning countermeasures against the United States.

Primarily functioning as a trading bloc, the EU’s main tools are mostly financial instruments, including steep tariffs on US goods and the so-called trade bazooka promoted by French President Emmanuel Macron. However, most of the 27 EU member states have remained doubtful about using these measures.

Macron called the tool as “a powerful instrument, and we should not hesitate to deploy it in today’s tough environment,” an AP report quoted the French President.

What is the ‘trade bazooka’?

The term is shorthand for the bloc’s anti-coercion instrument, which includes a range of measures to block or restrict trade and investment from countries suspected of applying undue pressure on EU member states or companies.

The measures might involve a restriction on the export and import of goods and services, preventing countries or companies from participating in EU public tenders, or limiting foreign direct investment. In its most extreme form, the bazooka would essentially block access to the 450-million consumer market of the EU.

The implementation of bazooka could cost billions of dollars to US companies and the American economy.

Why was ‘trade bazooka’ created?

This instrument was established by the European Commission in 2021 following China’s trade restrictions on Lithuania due to its relations with Taiwan, which Beijing considers its own territory.

“The primary objective of the ACI is deterrence. The instrument will, therefore, be most successful if there is no need to use it,” the report quoted a commission statement issued before the dispute over Greenland.

How long will it take to impose ‘trade bazooka’?

Activating the trade bazooka would require at least six months, the report said.

What is the volume of trade between the US and the EU?

The EU-US trade in goods and services was worth 1.7 trillion euros ($2 trillion) in 2024, averaging 4.6 billion euros per day, according to the EU statistics agency Eurostat.

Europe’s top exports to the US include pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. While the most significant US exports to Europe consist of professional and scientific services such as payment systems and cloud infrastructure, along with oil and gas, pharmaceuticals, medical equipment,