How should the EU respond to Donald Trump’s threats over Greenland? André Wolf argues the EU must now activate its anti-coercion instrument while also building a united front with key partners like the UK and Norway to defend a rules-based global order.
In an attempt to gain control over Greenland, Donald Trump has threatened Europe with a wave of new protectionist measures. Additional tariffs of 10 percent will be imposed on goods from eight European countries, including Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the UK.
If no agreement on Greenland’s political future is reached, the additional tariffs are set to rise to 25 percent in June 2026. Europe has never experienced such a clear example of economic coercion by a foreign power, not even in the recent turbulent geopolitical climate. This presents the EU not only with an opportunity but an obligation to deploy its anti-coercion instrument, which has remained unused until now.
What is the EU’s anti-coercion instrument?
The anti-coercion instrument was introduced by the EU in 2023 as part of a regulation in response to the attempted political blackmailing of Lithuania by China. It is based on an official recognition of economic coercion by an implementing regulation of the European Commission.
According to the regulation, economic coercion occurs when a third country takes or threatens to take a measure affecting trade or investment in order to force the EU or individual member states to take certain political decisions. The instrument is rightfully referred to as a “trade bazooka” because the determination of economic coercion can lead to a very extensive catalogue of response measures by the EU, targeted at the economic interests of the third country.
These range from tariff increases and exclusion from public procurement to restrictions on intellectual property rights protection and access to EU capital markets – even if this implies a violation of the EU’s existing international commitments. In particular, restrictions on US companies making direct investments in Europe could become a powerful lever.
This puts considerable pressure on the EU to act. If it refrains from using the painstakingly negotiated instrument for fear of triggering a spiral of escalation, this would render it practically useless. The EU would appear to the whole world to no longer be capable of defending itself, even economically.
Is the anti-coercion instrument enough to counter US tariffs?
Focusing solely on the anti-coercion regulation will not suffice in the conflict with the US. Activating the instrument requires a multi-stage process of information gathering and consultation with the sanctioned third country before response measures are applied. This puts the EU at a clear disadvantage compared to the Trump administration in terms of speed of action.
The regulation also sets restrictive requirements for the use of response measures. They must be proportionate to the level of economic damage caused by the coercion to the affected member states. They shall also aim to minimise any collateral damage to the EU economy and its policy goals. Given the strong transatlantic economic ties, both criteria could preclude use of the instrument beyond the imposition of counter-tariffs.
This could be particularly true if steps are taken to restrict capital movements. American banks and investors are not easily substituted by European capital. They have a different risk profile and are, on average, more willing to provide venture capital finance for transformative investments, especially in areas such as digital technologies. In its current technological transition phase, Europe is particularly vulnerable to any curtailment of foreign risk capital, a fact of which the Trump administration will be aware.
Moreover, a push by the European Commission towards a full exploitation of the EU’s defence arsenal could further intensify existing political tensions within the EU. Member states differ significantly in the strengths of their economic ties with the US and their political association with the Trump administration.
While the activation of the instrument does not require unanimous agreement in the European Council, opposing member states could still gain significant political leverage by claiming to be disproportionately affected by the countermeasures. A new political tug-of-war within the EU would delay the decision-making process and further undermine the EU’s negotiating position. To prevent this, the EU must adopt a more comprehensive approach to its dispute with the US.
Defending a rules-based order
Against this backdrop, it is fortunate for the EU that Trump’s latest tariffs also affect Norway and the UK. Both countries are ideal allies in a conflict with the US. Coordinated trade policy countermeasures by the EU and the UK – Washington’s only remaining strategic partner in Europe – would hit the US hard, both economically and politically.
If Norway were to join this cooperation too, it could address one of the EU’s central vulnerabilities, namely its dependence on US sources of liquefied natural gas (LNG). Since the start of the war in Ukraine, Norway has overtaken Russia to become the EU’s most important supplier of natural gas, with the US ranking second.
Negotiating additional long-term agreements for the supply of Norwegian natural gas to the EU would strengthen both parties in the conflict with the US and remove an important means of economic pressure from Washington. Such coordination with other affected states is explicitly provided for in Article 7 of the EU anti-coercion regulation. This could also reduce political opposition within the EU as the effectiveness of the countermeasures becomes apparent.
Hence, in a best-case scenario, the current endurance test could strengthen Europe’s overall economic resilience rather than weaken it. To exploit this opportunity, Brussels should not view the dispute over Greenland as a bilateral trial of strength, but as part of a wider multilateral conflict over the future of the global order.
The core issue is the defence of the European concept of a rules-based order against a purely power-based one. This conflict requires a united Europe. Unilateral defence measures, such as the anti-coercion regulation, will only be effective if they are integrated into a strategic framework for trade policy cooperation with the EU’s neighbours. Only in this way can the EU leverage its remaining crucial asset: its key position in the global trade networks of many high-tech goods.
Note: This article gives the views of the author, not the position of LSE European Politics or the London School of Economics.
Image credit: muratart provided by Shutterstock.
Discussion about this post