The European Union’s “trade bazooka” and the Greenland test: escalation with the United States

Tuesday 20 January 2026

In Brussels jargon, the “trade bazooka” refers to the European Union’s Anti-Coercion Instrument (ACI), a legal framework that allows the EU to respond when a non-member state uses trade or investment pressure to influence European policy choices. It entered into force on 27 December 2023. 

The framework was originally designed to deter coercive economic measures from rising powers and to prevent a situation in which member states are individually isolated and pressured. Now, in January 2026, its principles are being tested not by a rival power, but by an ally — the United States. Recent threats by President Donald Trump to impose punitive tariffs on several European nations that have supported Denmark and Greenland have shaken transatlantic economic and political relations. 

The Trump tariff threats: Europe targeted over Greenland

On 17 January 2026, President Trump announced that the United States would impose a 10 per cent tariff on imports from eight European countries, including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland, because of their opposition to U.S. efforts to gain control of Greenland. These tariffs were set to take effect on 1 February and to rise to 25 per cent by 1 June if a deal for the “complete and total purchase” of Greenland had not been concluded. 

By 19 and 20 January 2026, Trump had renewed and intensified these threats, tying them directly to opposition to his Greenland policy and signalling that they could apply more broadly to NATO allies supporting Denmark and resisting US pressure. Stock markets reacted sharply to the prospect of a renewed trade conflict, and European leaders held emergency discussions in Brussels to respond. 

EU officials and national governments have characterised these threats as economic coercion and “blackmail”, arguing that tariffs aimed at forcing sovereign decisions about Greenland’s future cross a line from normal trade policy into political pressure. Many leaders see this not merely as a commercial dispute but as an unprecedented use of trade measures to influence the internal affairs of European allies. 

What the “bazooka” actually is

The Anti-Coercion Instrument is not a magic bullet that fires automatically. It establishes a structured process the European Commission and member states can use when they believe a third country’s measures constitute undue coercion. 

Under the ACI, the EU can take a range of responsive actions, including:

• Tariffs or other border measures against the coercing country’s exports;

• Restrictions on services, public procurement or foreign direct investment;

• Limitations or restrictions to intellectual property protections for entities from a coercing state (for example, patents)

• Other measures calibrated to impose costs and change coercive behaviour. 

The goal is deterrence and de-escalation, using potential retaliation to bring coercive pressure to an end. Legal and diplomatic engagement is required before measures are implemented. 

Why Greenland turns a tariff dispute into a coercion case

Ordinary trade disputes revolve around subsidies, standards or market access. What makes the Greenland situation unusual is the explicit political linkage between tariffs and a sovereign territorial question. Trump’s tariffs are framed not as adjustments to commercial policy, but as a lever to influence decisions by Denmark and its allies about Greenland’s status — a matter of constitutional, geopolitical and strategic significance. 

Because this linkage points directly at a non-commercial policy objective, it fits more closely with what the ACI was designed to address: measures intended to “secure a change in the choice of policy by another government” through trade pressure (quote from the text of the EU legislation). 

How Europe might use the “bazooka” against the United States

If the EU concludes that the US tariff threats amount to coercion under the Anti-Coercion Instrument, it would follow a multi-stage approach:

1. Assessment and diplomacy. The Commission would formally assess whether Trump’s actions meet the ACI criteria, while continuing diplomatic engagement to de-escalate and seek withdrawal of the threats.

   
   

2. Coordination and authorisation. Member states must agree on any response, balancing solidarity with economic implications for European exporters reliant on the American market.

   
   

3. Proportionate countermeasures. If coercion persists, the EU could activate the ACI with tailored measures: counter-tariffs on targeted American exports, restrictions in services or procurement, or other instruments that leverage the size of the European market. 

Preparatory work is already under way. European capitals are considering reinstating previously suspended retaliatory tariffs on approximately €93 billion worth of US goods and threatening broader trade actions if coercion continues. 

The strategic dilemma: deterrence versus escalation

Europe’s leaders face a difficult choice. A weak response could encourage further coercion and signal that even close allies can be pressured into strategic concessions under trade threats. A strong response, however, risks a wider transatlantic trade war that could damage economies on both sides of the Atlantic, undermine NATO cohesion and destabilise global supply chains.

The aim of the Anti-Coercion Instrument is to provide a credible deterrent against coercive pressure, not to provoke unnecessary escalation. EU policymakers are therefore emphasising unity, legal clarity and offers of de-escalation while preparing the tools that could be deployed if necessary. 

What to watch next

Three indicators will determine whether the “bazooka” moves from metaphor to policy:

• Whether tariffs are applied and explicitly linked to political demands over Greenland. 

• Whether EU member states maintain unity in the face of American pressure. 

• Whether Brussels begins drafting specific countermeasures that go beyond old trade disputes into areas such as services and procurement or removal of US entities' intellectual property protection in the European Union. 

If the Greenland dispute continues on its present trajectory, the Anti-Coercion Instrument could become the EU’s first major test of whether she can translate market power into strategic deterrence, even against an ally whose behaviour many Europeans now characterise as coercive rather than cooperative.