Journal entry, 19 January 2026 (London)
The tariff ultimatum has forced Brussels into an uncomfortable posture: preparing to use a tool designed for external coercers against the world’s most consequential ally. The EU’s Anti-Coercion Instrument (ACI) is being discussed not because Europe wants a trade war, but because a precedent is forming—tariffs used to compel a sovereign decision—that the EU was explicitly legislated to resist. (Reuters, 2026a; European Commission, 2023). (Reuters)
1) What the ACI is (and why it exists)
Formally, the ACI is Regulation (EU) 2023/2675, intended to protect the Union and its Member States from economic coercion by third countries. It entered into force in late December 2023. (European Commission, 2023; European Union, 2023). (Trade and Economic Security)
The Commission’s own definition is blunt: economic coercion is when a third country seeks to pressure the EU or a Member State into making a “particular choice” by applying or threatening measures that affect trade or investment—interfering with sovereign choices. (European Commission, 2023). (Trade and Economic Security)
The instrument was developed after episodes such as China’s pressure on Lithuania, with the explicit objective of deterrence first—a tool meant to be most successful if never used. (Associated Press, 2026). (AP News)
2) How “coercion” is established: investigation, Council decision, then escalation options
Legally, the ACI is procedural rather than automatic. Under the Regulation, the European Commission examines whether a third-country measure meets the coercion conditions, either on its own initiative or following a substantiated request. (European Union, 2023). (EUR-Lex)
If the Commission concludes coercion exists, it submits a proposal to the Council for an implementing act; the Council adopts that act by qualified majority. (European Union, 2023). (EUR-Lex)
Only after that does the EU move into response territory. The Regulation prioritises consultations aimed at stopping the coercion (and, if requested, securing reparation), and then—if coercion does not cease—permits the Commission to adopt Union response measures through implementing acts. (European Union, 2023). (EUR-Lex)
3) What the EU can do: beyond retaliatory tariffs
This is why the ACI is called a “bazooka”. The Regulation’s annex lists a wide menu—ranging from increased customs duties and import/export restrictions, to measures affecting procurement and other market access levers. (European Union, 2023). (EUR-Lex)
Contemporary explainers emphasise the breadth: potential measures include curtailing imports/exports and services, limiting access to public procurement, and restricting investment—up to and including effectively shutting off access to the EU single market in extreme cases. (Associated Press, 2026). (AP News)
In parallel reporting, Reuters notes that the ACI could be used to restrict access to public tenders and potentially constrain investments or trade in services—an important asymmetry given the United States’ services trade position with Europe. (Reuters, 2026a). (Reuters)
4) Why Brussels hesitates: unity, sequencing, and “last resort” credibility
Despite pressure to act, the EU has not moved immediately to trigger the ACI. Euronews reports that Member States, in urgent discussions, prioritised dialogue and diplomacy first and held back from immediate activation; the ACI has never been used and remains untested in practice. (Euronews, 2026a). (euronews)
This restraint is not cost-free—it risks weakening deterrence if Washington concludes the tool is politically unusable. But it reflects an internal EU logic: escalation must be credible, legally tidy, and above all collectively owned, since activation requires qualified majority support and sustained unity over time. (Euronews, 2026b; European Union, 2023). (euronews)
A senior European Parliament voice, Bernd Lange (chair of the trade committee), captured the intended sequencing: start the ACI procedure, conduct investigation and dialogue, then decide on measures—explicitly framing the crisis as the first time Trump has used trade as political pressure in this manner. (Euronews, 2026b). (euronews)
5) The “Plan B” sitting on the shelf: €93bn retaliation list and political signalling
Alongside the ACI, reporting indicates the EU is also weighing revival of a previously prepared retaliation list—around €93 billion—as a more conventional first response if tariffs proceed, with an emergency leaders’ discussion scheduled. (Reuters, 2026a; Euronews, 2026a). (Reuters)
This creates a two-track posture:
- Track 1 (conventional): retaliatory tariffs list as an immediate, familiar instrument. (Reuters)
- Track 2 (systemic): ACI as the heavier tool designed to treat the behaviour itself—economic coercion—as the core violation. (Trade and Economic Security)
What this episode establishes
The EU’s “bazooka” debate is not primarily about technical trade law; it is about whether coercion becomes normalised in relations with allies. Brussels is trying to preserve a hierarchy:
- Dialogue first (keep alliance repair possible). (euronews)
- Conventional retaliation if needed (maintain deterrence without detonating the relationship). (Reuters)
- ACI escalation as last resort (signal that sovereignty-by-tariff is unacceptable). (Trade and Economic Security)
In effect, Europe is attempting to answer the tariff ultimatum with a different kind of ultimatum: the single market is not simply an economy; it is a power instrument—and it exists precisely for moments when trade is weaponised to force sovereign concessions.
References
Associated Press (2026) ‘What the EU’s “trade bazooka” is and how it works’, 22 January. (AP News)
European Commission (2023) ‘Protecting against coercion’ (Trade and Economic Security), updated page. (Trade and Economic Security)
European Union (2023) Regulation (EU) 2023/2675 of the European Parliament and of the Council of 22 November 2023 on the protection of the Union and its Member States from economic coercion by third countries, Official Journal of the European Union. (EUR-Lex)
Euronews (2026a) ‘EU holds back trade “bazooka” as it seeks diplomatic solution with the US over Greenland’, 18 January. (euronews)
Euronews (2026b) ‘Europe wants to “avoid escalation” with US over Greenland: what comes next’, 19 January. (euronews)
Reuters (2026a) ‘EU scrambles to avert Trump Greenland tariffs, prepares retaliation’, 19 January. (Reuters)