In the ongoing trade conflict with the United States, European officials are contemplating the implementation of barriers on imports of U.S. services, potentially targeting major technology firms and financial institutions.
European Commission President Ursula von der Leyen stated, “We have the power to push back,” emphasizing the bloc's readiness to respond to U.S. trade actions.
President Trump has already introduced tariffs on aluminum, steel, cars, and auto parts, measures that could significantly impact the fragile European economy. In retaliation, Brussels has announced plans to reimpose tariffs on U.S. imports, including Harley-Davidson motorcycles and whiskey, which were previously affected during earlier trade disputes initiated by Trump.
To counter Trump's recent tariffs, European officials are considering the use of an anti-coercion instrument, a policy tool adopted in 2023 aimed at addressing coercive trade practices, particularly from China. This instrument is viewed as a last resort if negotiations with the Trump administration do not yield favorable results.
The European Union could potentially utilize this tool to target American tech giants and financial institutions. One proposal under consideration involves restricting American banks' access to the E.U.'s substantial public procurement market, which encompasses projects valued at approximately 2 trillion euros ($2.2 trillion) annually.
Another aspect of the preliminary plan includes addressing the significant investments made by Europeans in American companies, which amount to around €300 billion each year. Additionally, Brussels may consider increasing tax and regulatory pressures on American digital platforms.
While the specifics of the plan remain unclear, it reflects the broad range of strategies being explored by policymakers as the bloc formulates its negotiating stance.
Fabrizio Pagani, a partner at an investment bank and former economic official in Italy, suggested that the anti-coercion tool should be used primarily as a deterrent to facilitate negotiations.
Olof Gill, a spokesman for the European Commission, confirmed that the anti-coercion instrument is under consideration as part of Brussels' negotiation strategy. Despite the E.U. achieving a significant trade surplus in goods, it faces a trade deficit of approximately €110 billion in services with the United States, a factor that could be pivotal in negotiations.
However, some analysts express concern that adopting a hardline approach may have adverse effects. Joachim Klement, head of strategy at an investment bank, warned that tariffs on services, similar to those on goods, would adversely affect consumers and businesses, potentially exacerbating the trade conflict.
“You are just putting fuel on the stagflationary fire,” he cautioned.