EU Anti-Coercion Instrument - ACQUIS

On 18 January 2026, transatlantic trade relations took a volatile turn. After U.S. President Donald Trump threatened steep new tariffs on certain European goods, in an attempt to pressure EU allies during a geopolitical dispute over Greenland, European leaders swiftly condemned what they viewed as an act of economic coercion. French President Emmanuel Macron even urged the EU to activate its brand-new Anti-Coercion Instrument (“ACI”) for the first time, underscoring the gravity of the situation. EU officials are now openly discussing countermeasures, signaling, in President Macron’s words, that Europe “will not be blackmailed”[1].

The EU’s new anti-coercion instrument: purpose and legal basis

The ACI is the European Union’s latest trade-defence tool, created specifically to deter and counter economic coercion by non-EU countries[2]. Established by Regulation (EU) 2023/2675[3], which entered into force on 27 December 2023, the instrument was prompted by recent cases of countries using trade or investment restrictions to influence EU policy choices or interfere with the EU’s sovereign decision-making[4]. The ACI was conceived in response to concrete instances of economic coercion, most notably China’s trade restrictions targeting Lithuania in 2021 following Lithuania’s decision to deepen relations with Taiwan[5].

The legal basis for the ACI is Article 207 of the Treaty on the Functioning of the EU, which empowers the Union to act in the realm of common commercial policy (i.e. trade measures). The ACI’s objectives also align with Article 21 of the Treaty on European Union, which calls on the EU to uphold its interests and values in external action, including respect for international law. In essence, the ACI gives the EU a unified option, often described as a “big bazooka”, to defend itself and its Member States against economic blackmail, with the primary goal of deterrence[6].

How the ACI works and when it can be activated?

Activation of the ACI follows a structured process. First, the European Commission examines the situation (on its own initiative or after a complaint) to determine if a third country’s actions amount to economic coercion. If the facts warrant it, the Commission will formally propose a decision, and the Council of the EU (by qualified majority) swiftly determines that the EU or a Member State is indeed facing coercion. Once such a determination is made, the Commission engages with the offending country to try to resolve the issue through dialogue (for example, negotiations, mediation, or other diplomatic avenues). Only if these good-faith efforts fail to halt the coercion by a set deadline would the EU resort to response measures under the ACI framework.

Even then, the instrument is wielded carefully: any countermeasures must adhere to international law (treating them as lawful countermeasures to the other side’s unlawful pressure) and are calibrated based on objective criteria such as effectiveness and minimizing collateral damage to European interests.

Potential countermeasures and impact on EU businesses

If the ACI is deployed against the U.S. in this case, EU countermeasures could span a wide range of economic sectors. The regulation explicitly empowers the Commission to impose restrictions on access to the EU market and other economic disadvantages for the third country. In practice, this means the EU can choose from an extensive menu of options, such as: increased tariffs or quotas on U.S. goods, limits on or blocking trade services and foreign direct investment from the U.S., exclusion of U.S. firms from public procurement contracts, restrictions related to financial markets, suspension of certain intellectual property rights, or even export controls on sensitive items. These measures can be general or targeted: for instance, they might single out specific industries, companies, or products where U.S. economic interests are most exposed in Europe. The aim would be to pressure Washington to back down by hitting politically sensitive U.S. exports and investments, while avoiding undue harm to EU businesses and consumers. Indeed, the Commission is required to consult stakeholders and Member States to tailor any response measures, seeking to protect European supply chains and keep costs for EU operators as low as possible.

Activating the ACI does not itself impose any obligations on private companies. However, businesses should be alert to the potential knock-on effects of any ACI countermeasures if the situation escalates. New tariffs or import restrictions could raise costs for importers or exporters of affected goods. Service providers might face new barriers or competition shifts if transatlantic digital or financial services are curbed. Companies that partner with U.S. firms (for example, in government procurement, tech, or aerospace projects) could see eligibility rules change if U.S. bidders are restricted.

An unusual test case: ACI against a major economic partner

President Trump’s tariff gambit puts the EU’s brand-new Anti-Coercion tool to an unprecedented test. While the ACI was primarily designed with other scenarios and other geopolitical players in mind, it was likely not anticipated that its first potential use would involve the United States, a major economic partner and the world’s largest economy.

Deploying the ACI against the United States would carry a significant risk of escalation, which explains why EU leaders have so far adopted a cautious tone. While there is broad political consensus that the EU should not accept economic coercion, several Member States have emphasised that any response must remain measured and proportionate (particularly Germany, whose economy is structurally more exposed to transatlantic trade[7]).

Nevertheless, the fact that the EU is openly considering the ACI signals a new assertiveness in Europe’s trade policy. It serves notice that even the U.S. could face countermeasures under this framework if it were to follow through on coercive tariffs. For businesses across Europe, this development is a reminder of how quickly trade policy risks can materialize. The activation (or even just the threat of activation) of the ACI in this context is highly unusual, but it demonstrates the EU’s resolve to protect its Member States’ sovereign choices. Should the EU formally trigger the ACI process, companies would be well advised to stay informed on the specific measures proposed and assess their exposure. While hoping that cooler heads prevail and the ACI’s big stick remains sheathed, European operators should be prepared for potential fallout across sectors (from agriculture to tech to finance) as the EU and U.S. navigate this delicate episode. The coming weeks will indicate whether diplomatic engagement is sufficient, or whether the EU’s new trade-defence instrument will see its first concrete application in a transatlantic context.

[1] See multiple press coverage, notably https://www.politico.eu/article/macron-to-urge-eu-to-use-trade-bazooka-in-response-to-trumps-tariffs/

[2] Protecting against coercion - Trade and Economic Security

[3] Regulation 2023/2675 on the protection of the European Union and its Member States from economic coercion.

[4] European Commission, Proposal for a Regulation on the protection of the Union and its Member States from economic coercion by third countries, COM(2021) 775 final.

[5] See multiple press coverage, notably China-Lithuania Tensions Boil Over Taiwan - Jamestown

[6] See the Q&A regarding the Anti-Coercion Instrument - Trade and Economic Security, Question 1.

[7] See notably https://www.politico.eu/article/berlin-and-paris-to-negotiate-joint-response-to-trumps-tariff-threat-germanys-merz/