Von der Leyen's weapon of deterrence to counter Trump's tariffs

BrusselsUrsula von der Leyen holds her hand outstretched in Donald Trump until the last momentBut she warns that she will not be bothered by paying in kind and applying a tit-for-an-tat strategy. "Europe has many cards to play and all the instruments are on the table," the President of the European Commission warned on Tuesday in a speech to the European Parliament.

Specifically, both the European Commission and several European governments have reminded the White House that since 2023 they have had the so-called "anti-coercion instrument." This is a regulation that some international media have compared to a nuclear weapon in the field of international trade, because it was not created with the intention of applying it, but rather to have it in the chamber to dissuade other powers from attacking the European Union with a barrage of tariffs. In fact, the law itself indicates that it is not desirable to press the red button of this trade tool, and that it should only be activated in a case of coercion by a third country and once all avenues of dialogue have been exhausted.

This legislation aims to provide the EU with a legal framework to facilitate, as a matter of urgency and speed, the possibility of increasing customs duties, restricting imports or exports, excluding certain countries from participating in public tenders, or, among other things, suspending international obligations regarding intellectual property, which particularly affects them.

The problem, however, is that the EU itself has legal doubts about how far it can apply its legislation in the case of the United States. It is a mechanism designed to respond to coercion by a third country specifically against the European bloc or one of its member states, but not to respond to a general increase in tariffs. Therefore, this instrument is more easily applicable if Trump chooses to punish only or specifically the EU club and does not increase customs duties on products imported from everywhere equally.

Furthermore, although it is an urgent procedure, the evaluation of whether the EU is truly the victim of coercion by a foreign power can take up to four months, and the activation of this measure must have the approval of a qualified majority of the bloc's member states. That is to say, although it must be proposed by the European Commission, which has trade powers, 65% of EU countries must be in favor and have a say in how and to what extent it is applied, which could lead to divisions between partners.

Thus, everything currently indicates that the European Commission would not respond immediately with countermeasures to the Trump administration and would first want to thoroughly study the impact of potential US tariffs. In fact, Brussels has already postponed the entry into force of an initial response from the White House that sought to raise customs duties on some iconic US products, such as Levi's jeans, Bourbon whiskey, and Harley-Davidson motorcycles, to give Washington more leeway and push back.