EU May Retaliate Against Trump's Tariff Threats by Targeting US Tech Giants

The trade war clouds are once again gathering, with the potential to engulf Silicon Valley. As Trump's "tariff bludgeon" looms over the EU, reports indicate that the EU is planning retaliatory measures that could target US tech giants.

On Tuesday, EU trade ministers convened in Warsaw, the capital of Poland, to deliberate on Trump's tariff threats. Officials privy to the closed - door discussions revealed that the majority of the attendees were in favor of punitive actions if necessary.

The EU's Commissioner for Trade and Economic Security, Maroš Šefčovič, told the media that he hoped to negotiate to avoid tariffs but added, If we are hit, we will respond resolutely.

The European Commission is considering using the Anti - Coercion Instrument (ACI) in a potential dispute with the US. This instrument, passed into legislation by the European Council in 2023, is designed to deter third - countries from coercion against the EU or its member states. ACI gives the EU the power to target the US service sector, including large US tech companies.

ACI, dubbed the bazooka due to its wide - ranging retaliatory options, allows for responses such as trade restrictions, including increased tariffs, import and export licenses, and limitations on service trade, foreign direct investment, or public procurement. One official said, All options are on the table, emphasizing that ACI represents the toughest response available without violating international law.

Trump's previous actions, such as threatening Denmark with tariffs to force it to cede Greenland and pressuring the EU to abandon law - enforcement actions against large US tech companies, meet the preconditions for the use of ACI, according to EU officials.

Laurent Saint - Martin, the French Minister - Delegate for Foreign Trade, stated that despite having ACI, the EU needs faster retaliatory measures. Speed is one of the key issues. We must be better prepared and act faster than last time. He was referring to the three - month delay in passing retaliatory tariffs against the US in 2018, in contrast to the rapid responses of Canada and Mexico last week, which issued retaliatory measures within hours of the US announcing tariffs.

Trump said last week that he would absolutely impose tariffs on the EU, citing Brussels' actions against US tech companies and the large trade deficit in goods. For the EU, any retaliation must be proportionate. The Commission must provide evidence of damage to EU industries and seek approval from at least 15 of the 27 member states. The consultation process could take weeks.

As the trans - Atlantic trade tension escalates, the tech - heavy service sector in the US may find itself in the cross - hairs of the EU's retaliation, potentially reshaping the global trade and technology landscapes.