Tariffs, what the EU's anti-coercion mechanism is and what it provides for

To protect its trade, respond to economic aggression and unfair trade practices by non-European powers, the EU is working on the introduction of the so-called anti-coercion mechanism. The purpose of this instrument, as the EU institutions explain, is to act as a deterrent, allowing the EU to solve trade conflicts through diplomacy. But in case of need, it could be used to take action against non-European countries, with measures ranging from trade restrictions to investment and financing restrictions.

On 6 June 2023, the European Parliament and the European Council reached an agreement on the final legislative text introducing the anti-coercion mechanism. Then, on 3 October 2023, the agreement was approved by the MEPs.

The anti-coercion instrument authorises unilateral trade measures, investment restrictions and even public procurement restrictions for companies from third countries deemed hostile. Germany and the Netherlands are believed to be on board, although more hesitant ('we must remain united', urged outgoing Dutch Prime Minister Dick Schoof), while Italy is still urging caution in order to 'avoid a trade clash', as MEP Nicola Procaccini (FdI) put it. Dialogue is still possible until August, and a balanced solution remains within reach'. Between these two lines the confrontation at Coreper will take place. The first package of possible counter-duties - frozen since April - would affect goods symbolic of deep America: Harley-Davidson, Levi's, peanut butter, Midwestern corn and Louisiana soya, with an estimated value of almost EUR 21 billion. A second package, at an advanced stage, could go further with tariffs on tech and automotive up to 72 billion. In the queue remains the 'bazooka' of sanctions on US big tech.

This mechanism was invoked on Saturday 12 July, shortly after Trump's letter arrived, by French President Emmanuel Macron. "France shares with the President of the European Commission its strong disapproval of the announcement of 30% horizontal tariffs on EU exports to the United States as of 1 August. This announcement comes after weeks of intensive negotiations by the Commission with the US, based on a solid and bona fide offer. In European unity, it is more important than ever for the Commission to affirm the Union's determination to resolutely defend European interests,' the French President wrote on X.

"This implies that it is necessary to accelerate the preparation of credible countermeasures, through the mobilisation of the toolbox at our disposal, and including the anti-coercion mechanism, if no agreement is found between now and 1 August," he added. "On this basis, France fully supports the European Commission in the negotiations that will intensify to reach a mutually acceptable agreement by 1 August, so that it reflects the respect owed by trading partners such as the EU and the US, to shared interests and integrated value chains," he concluded.