Europe mulls counter-tariffs, ACI against the U.S. amid Greenland crisis

European states are reportedly considering retaliatory tariffs and broader punitive economic counter-measures against the U.S. after President Donald Trump threatened fresh export levies, deepening a rift over Greenland.

Trump announced Saturday that eight European countries would face increasing tariffs, starting at 10% on Feb. 1 and rising to 25% on June 1, if a deal is not reached allowing Washington to acquire Greenland, the mineral-rich island which is a semi-autonomous territory of Denmark.

The proposed tariffs would target Denmark, Norway, Sweden, France, Germany, the U.K, the Netherlands and Finland. The duties would come on top of existing export tariffs to the U.S., currently standing at 10% for the U.K. and 15% for the EU.

Regional diplomats held an emergency meeting in Brussels on Sunday afternoon to discuss their response to Trump’s threat to escalate tariffs, with France reportedly pushing for the EU to use its strongest economic counter-threat to the U.S., known as the “Anti-Coercion Instrument” (ACI).

The much-vaunted instrument is seen as a nuclear option when it comes to economic counter-measures as it could see the EU restrict U.S. suppliers’ access to the EU market, excluding them from participation in public tenders in the bloc, as well as putting export and import restrictions on goods and services and putting potential limits on foreign direct investment in the region.

Despite being seen as a “big bazooka” against Trump’s tariffs playbook, it has not been used before, and regional leaders have already said they want to pursue dialogue with the U.S. in the coming days to resolve the rift over Greenland.

The Financial Times reported that the EU was contemplating imposing 93 billion euros ($108 billion) worth of tariffs, as well as considering the use of the ACI.

Meanwhile, Reuters reported that the European Parliament will likely now suspend its work on the EU-U.S. trade deal struck last July. The assembly had been due to vote on removing many EU import duties on U.S. goods on Jan. 26-27, but that approval could now be delayed, Reuters reported.

French Finance Minister Roland Lescure said Monday that the EU “must be prepared” to use its anti-coercion mechanism, in comments translated by Reuters.

While France is more gung-ho about the ACI, Germany is among the countries that have tended to shy away from using it before.

“The key question to watch is whether the EU will try to keep the confrontation confined to such a more “classic” trade war, or whether calls for a harsher line prevail,” Carsten Nickel, deputy director of Research at Teneo, said in emailed comments….