Economic War with the US?
Donald Trump is threatening certain European countries with 10% tariffs until he can buy Greenland. In response to that blackmail-laced tactic, the EU is considering imposing 93 billion euros worth of tariffs on the United States.
The European Union is once again discovering, loudly and belatedly, an uncomfortable truth: When it comes to trade matters, the U.S. signs agreements … and then rewrites them by decree. Barely a few months ago, Washington and Brussels agreed on a framework limiting U.S. tariffs on European exports to 15%. Today, Donald Trump is threatening to impose an additional 10% tariff — and another 25% tariff in June — on several European countries for a reason as outlandish as it is telling: to force talks for the U.S. to “buy” Greenland.*
The story is bizarre; the pattern, concerning. If the world’s leading power treats trade agreements as worthless, the message is clear: legal certainty is conditional, dependent on the temperament of the person residing in the White House. And the European ruling class is tempted to respond in kind, with retaliation.
It started with tariffs on 93 billion euros worth of U.S exports. But something more ambitious is at play: activating the EU “Anti-Coercion Instrument,” adopted in 2023, which allows the EU to go beyond tariffs and punish the country that “coerces” it with a wide range of measures.
What could this “nuclear button” mean? First, it could translate into turning major U.S. tech companies into political hostages: ad hoc taxes, stifling regulatory requirements or restricted access to the European market. It would be sold as digital sovereignty; it would be experienced as operational chaos: fewer services, less effective advertising, forced cloud migrations, and higher costs for European companies.
Second, it could mean restricting European exports of essential goods to the U.S., including specialized machinery and other products that are difficult to replace in the short term. Third, it could lead to further blocking U.S. exports — energy included— just when Europe has already paid the price for breaking away from Russia.
And if this madness escalates, we would enter a financial cold war: the coordinated sales of U.S. public debt or, in extreme cases, blocking international banking operations. Measures like this are not scalpels, they are grenades. The U.S. would pay more to finance itself, and Europe could trigger panic if its access to the dollar is hindered, especially with bank liabilities denominated in that currency.
The conclusion is simple: economic wars punish those who declare them as well as those who suffer them. Trump is hurting American families and businesses with his tariffs; Europe will do the same to Europeans if they respond by raising the price of — or cutting off access to — goods, services and finances. Either reasoning will prevail or both sides will pay the price. And, as always, the people will pay for it, not the politicians who are playing geostrategy with someone else’s money.
*Editor's note: President Donald Trump said Wednesday that he would not impose new tariffs on eight countries in Europe because they opposed his plan to annex Greenland.
The European Union is once again discovering, loudly and belatedly, an uncomfortable truth: When it comes to trade matters, the U.S. signs agreements … and then rewrites them by decree. Barely a few months ago, Washington and Brussels agreed on a framework limiting U.S. tariffs on European exports to 15%. Today, Donald Trump is threatening to impose an additional 10% tariff — and another 25% tariff in June — on several European countries for a reason as outlandish as it is telling: to force talks for the U.S. to “buy” Greenland.*
The story is bizarre; the pattern, concerning. If the world’s leading power treats trade agreements as worthless, the message is clear: legal certainty is conditional, dependent on the temperament of the person residing in the White House. And the European ruling class is tempted to respond in kind, with retaliation.
It started with tariffs on 93 billion euros worth of U.S exports. But something more ambitious is at play: activating the EU “Anti-Coercion Instrument,” adopted in 2023, which allows the EU to go beyond tariffs and punish the country that “coerces” it with a wide range of measures.
What could this “nuclear button” mean? First, it could translate into turning major U.S. tech companies into political hostages: ad hoc taxes, stifling regulatory requirements or restricted access to the European market. It would be sold as digital sovereignty; it would be experienced as operational chaos: fewer services, less effective advertising, forced cloud migrations, and higher costs for European companies.
Second, it could mean restricting European exports of essential goods to the U.S., including specialized machinery and other products that are difficult to replace in the short term. Third, it could lead to further blocking U.S. exports — energy included— just when Europe has already paid the price for breaking away from Russia.
And if this madness escalates, we would enter a financial cold war: the coordinated sales of U.S. public debt or, in extreme cases, blocking international banking operations. Measures like this are not scalpels, they are grenades. The U.S. would pay more to finance itself, and Europe could trigger panic if its access to the dollar is hindered, especially with bank liabilities denominated in that currency.
The conclusion is simple: economic wars punish those who declare them as well as those who suffer them. Trump is hurting American families and businesses with his tariffs; Europe will do the same to Europeans if they respond by raising the price of — or cutting off access to — goods, services and finances. Either reasoning will prevail or both sides will pay the price. And, as always, the people will pay for it, not the politicians who are playing geostrategy with someone else’s money.
*Editor's note: President Donald Trump said Wednesday that he would not impose new tariffs on eight countries in Europe because they opposed his plan to annex Greenland.
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