Report from Bloomberg
In Brief – Facing rapid escalation of President’s Trumps demand that Denmark hand over control of Greenland to the United States, including the threat that the US would impose a new 10% tariff on exports from countries that “oppose” his plan as of February 1, the EU is considering trade penalties against US services companies, including Big Tech. The EU’s initial trade retaliation plan for Greenland is expected to the based on a $108 billion package of targeted tariffs approved by the European Commission last spring during the trade standoff sparked by President Trump’s “reciprocal tariffs”. They were shelved after the US and EU worked out a trade deal, but could be reinstated as of February 6. Last spring there were also calls for the European Commission to use the EU’s untested trade retaliation “Anti-Coercion Instrument” (ACI) enacted in 2023 with Chinese foreign policy threats in mind, and those calls are again being aired, led by France. Referred to as a “trade bazooka”, the EU can impose a wide range of penalties on digital and services companies, including tariff-like levies but also restrictions on government contracting and limits on IP rights.
Context – Last spring, potentially pulling the cord on the ACI was mostly about expanding trade retaliation to threaten US industries that were more economically and politically important to the US and the Trump Administration. The digital giants fit both bills. President Trump’s willingness to threaten tariff retaliation against the EU for all kinds of digital taxes and regulatory policies clearly appealed to some in US tech industries who thought the prior administration did not stand up for them, but a full-scale trade war that pulls them directly in is likely to be a different matter. In Europe, tech sovereignty backers will continue to use strategic instability to argue for major domestic European tech development initiatives, although taxes or other limits on US tech companies will directly impact EU customers who don’t have ready alternatives at scale for many popular business and consumer services.