As U.S. President Donald Trump warned he would impose additional tariff on Europe in response to its opposition to his plan to annex Greenland, an analysis said European countries could even consider cards that might, in the worst case, trigger so-called "Sell America."
On the 19th (local time), Politico, a U.S. political outlet, projected five countermeasures European countries could consider at an emergency summit set for the 22nd to discuss a joint response to the U.S. tariff threat and the Greenland issue.
The most immediate option discussed is retaliatory tariff against the United States. The European Union (EU) last year drew up a list of retaliatory tariff on U.S.-made products totaling 93 billion euros (about 160 trillion won) in response to the Trump administration's reciprocal tariff. But as the two sides began trade talks, the measure has been deferred until the 6th of next month. If the retaliatory tariff takes effect as scheduled, emblematic U.S. consumer goods such as Levi's jeans, Harley-Davidson motorcycles and Kentucky bourbon whiskey will be hit directly. In addition, items produced in regions with strong Republican leanings, like soybeans, will also be affected.
Alongside this, Europe is weighing the option of invoking the anti-coercion instrument (ACI), dubbed the "trade bazooka." It is considered the toughest among the tools for responding to U.S. trade moves. Citing sources at the Élysée Palace, the BBC said, "French President Emmanuel Macron plans to formally push for activation of the ACI in talks with leaders of major European countries."
The ACI is a system that allows restrictions on trade in a range of areas—services, foreign direct investment, financial markets, public procurement and intellectual property rights—against a third country that economically threatens the EU or a member state. If this measure is activated, U.S. corporations' access to the European market would be effectively blocked. However, broad agreement among member states is required to invoke the ACI, and it has not been used once since its introduction in 2023.
In finance, a scenario is being discussed in which Europe could rattle U.S. financial markets by mass-selling U.S. stocks and bonds it holds. If European governments order domestic banks and pension funds to offload U.S. asset at fire-sale prices, it would almost certainly trigger a financial crisis and send U.S. borrowing expense soaring, Politico said.
In fact, after President Trump released reciprocal tariff in April last year, a sell-off swept the U.S. Government Bonds market—once seen as a safe asset—sending Treasury yields surging (bond prices plunging). This is seen as a decisive factor that led the Trump administration to defer the reciprocal tariff for 90 days. George Saravelos, global head of FX research at Deutsche Bank, said the total aggregates of U.S. stocks and liability held by Europe's public and private institutional sector stands at $8 trillion (about 11,821 trillion won), which is "twice as much as the rest of the world combined."
This strategy inflicts devastating losses on both the United States and Europe. Politico said, "America's massive liability is one of its major Achilles' heels," but added that if Europe sells off U.S. financial assets it holds at fire-sale prices, "bond prices would crash and, as a result, European financial institutions would also suffer huge losses," calling it "the nuclear mutually assured destruction of finance (a situation in which both sides are doomed by a preemptive strike and a retaliatory strike)."
Strengthening ties with China is also among the options Europe could consider. Canada, which is in conflict with the United States, appeared mindful of the U.S. as it signed a preliminary trade deal with China last week to liberalize imports of Chinese electric vehicles in exchange for sharply cutting tariff on its own agricultural products, moving to improve relations with China. The European Union (EU) could also check the United States by strengthening cooperation with China, its second-largest trade partner among Asian countries, analysts say. However, given that Europe's auto market is already under heavy pressure from a flood of Chinese electric vehicles, many say it will be hard to cozy up to China as aggressively as Canada.
Lastly, there is a strategy of buying time and avoiding a head-on clash with the United States. This is also the stance the EU is currently taking. Olaf Gill, a deputy spokesperson for the European Commission, emphasized that "the priority is not to escalate tensions but to resolve issues through dialogue and avoid the imposition of tariff."
Whichever card Europe chooses against the United States, the key is whether European leaders can forge a common consensus. Trump is attempting to sow division by applying tariff pressure on France and Germany while flaunting friendly ties with some countries such as Italy. Politico said, "Maintaining cohesion among European countries will be a very big challenge," adding that "very broad support is needed to take full retaliatory steps, such as deploying the anti-coercion instrument, known as the EU's 'trade bazooka.'"