Europe Has ‘Big Bazooka’ in Back Pocket to Retaliate Against Trump Tariffs, Expert Says

The president of the European Commission, Ursula von der Leyen, said the bloc has plans in place to retaliate against tariffs imposed by Donald Trump, and won’t hesitate to use it should the situation merit it.

Speaking before Trump’s announcement, the official said that “Europe has not started this confrontation” and does not “necessarily want to retaliate, but if it is necessary, we have a strong plan to retaliate and we will use it.”

Trump imposed 20% tariffs on the European Union on Wednesday. And an European investor believes the plan to retaliate could involve the Anti-Coercion Instrument, which would allow the bloc to place limitations on service companies. It could also involve import or export restrictions and other limitations to access the European markets.

Concretely, Fabrizio Pagani, a partner at investment bank Vitale and former Italian official, told DealBook that the plan is called “the big bazooka.” “I personally think the big bazooka should be used first of all as a deterrent. So put it on the table, and let’s negotiate,” he added.

The outlet added that EU officials are considering the possibility of implementing ACI limitations on U.S. banks’ ability to access the bloc’s public procurement market, a market worth $2.18 trillion a year. “We have the largest single market in the world. We have the strength to negotiate. We have the power to push back,” von der Leyen added.

Countries and regions around the world are reeling from the announcement. China is among those affected the most: according to Beijing’s customs data, sales of Chinese goods to the United States last year totaled more than $500 billion, over 16% of the country’s exports.

“The US tariffs on Chinese imports announced so far this year could fully negate the lift from the fiscal stimulus measures announced so far,” Frederic Neumann, Chief Asia Economist at HSBC, told AFP.

Trump, on his end, is celebrating the announcement, saying on Thursday that the “operation is over!” and the “patient lived, and is healing.” “The prognosis is that the patient will be far stronger, bigger, better and more resilient than ever before. Make America great again!!!,” the president said in a social media publication.