Time for EU to show its gun in US tariff spat, says ex-trade chief

Euronews

2 days ago

The EU needs to deploy its 'bazooka' anti-coercion trade weapon and show it means business, since tariff negotiations with the US won't lead to a balanced outcome, the European Commission's former chief of trade has told Euronews in an interview.
'Trump isn't looking for an agreement — he's engaging in mafia-style extortion,' said former Director-General of DG Trade Jean-Luc Demarty, adding: "In addition to the €93 billion in retaliatory measures, I would add the triggering of the anti-coercion instrument. What Trump is doing is clearly coercion. It would be a way to show that we've put our Colt on the table for the negotiation.'
On 12 July, US President Donald Trump threatened to impose 30% tariffs on EU imports if a satisfactory agreement is not reached with the EU on tariffs by 1 August.
Since mid-March, the US and the EU have been embroiled in a trade dispute, with EU steel and aluminium imports facing a 50% US tariff, cars 25%, and all other imports 10%.
The EU has adopted an initial list of retaliatory measures, currently suspended, targeting €21 billion worth of American products. A second list, covering €72 billion, is in the process of being adopted.
But Demarty said the EU executive needs to go further, by contrast with Commission President Ursula von der Leyen, who said on 13 July that the situation did not yet amount to coercion.
Anti-coercion instrument offers stronger trade defences
The anti-coercion instrument, adopted by the EU in 2023, allows the EU to restrict the right to participate in public procurement tenders, restrict licences and adopt restrictions on trade in services and trade-related aspects of intellectual property rights, once coercion by a third country has been established.
According to the former senior EU official, since the negotiations stand no chance of resulting in a balanced deal, the EU will have to target US services — and that will require political courage.
'Measures will need to be taken on services, digital and financial sectors, to rebalance an asymmetric deal. Because by targeting US goods, the EU cannot significantly exceed around €100 billion without shooting itself in the foot — since the rest are imports it depends on,' he said.
'It's an existential political moment,' he added. 'If we aren't capable of doing this, then why would the Chinese hesitate to exert coercion against us? Or others ? It would prove that Europe has the courage to take the risk of a trade war, which in my opinion is inevitable. It will be costly for us, but much more costly for the United States, and it will push Trump back.'