EU-US Trade Tensions Reach New Level of Uncertainty

Introduction

The ongoing trade tensions between the EU and the US have reached a new level of uncertainty, with the looming threat of a 30% tariff on European exports to the US. As a result, Brussels is considering using its "Anti-Coercion Instrument" as a last resort to deter the potential tariffs. This move, also known as the "trade bazooka", could have significant consequences for both economies.

Key Details

The "Anti-Coercion Instrument" is a new trade defense mechanism introduced by the EU in February 2021. It is designed to protect European companies from unfair trade practices and retaliation from other countries. While it has not yet been used, the looming tariffs from the US could be the first real test for this instrument.

The potential impact of the tariffs on EU exports is significant, with industries such as wine, spirits, and aircrafts being heavily targeted. The European Commission has estimated that the tariffs could lead to a loss of 5 billion euros for the EU's agri-food sector alone.

Impact

If the EU decides to deploy the "trade bazooka", it could have long-lasting implications for the trade relationship between the EU and the US. It could also potentially lead to a tit-for-tat situation, with the US retaliating with its own trade measures. This could ultimately harm both economies and disrupt