WSJ: In response to US tariffs, the EU may close US bases on the continent
The EU has something to respond to the new tariffs that Trump threatens to impose on the union over the Greenland dispute, writes The Wall Street Journal. The Brussels arsenal even has a kind of "bazooka" that will be used as a last resort.
Kim Mackrael
European leaders have several ways to respond to the threat of tariffs from the United States due to the conflict over Greenland. Possible options include trade countermeasures, a reduction in defense ties, and even a bazooka to protect against economic pressure.
The countries that Trump has threatened with economic measures cannot stand alone against his 10% tariffs. However, by joining forces, they can increase the negative effects of the duties on the United States.
The European Union (EU) has already prepared a list of more than $100 billion worth of American goods for which it may impose retaliatory tariffs. In addition, the bloc has the right to suspend key provisions of the trade deal with the United States, which Donald Trump called "the largest of all."
During the crisis talks held on Sunday, the EU ambassadors also discussed the possibility of using a previously unknown tool, which is often referred to as a "bazooka." This tool allows them to resist when they face economic pressure from another country.
The ambassadors could not come to an agreement on which path to choose in the end. The diplomats noted that they still have time to hold talks with the United States and internal discussions before the bloc makes a final decision on further steps.
European leaders will meet later this week to discuss the issue of retaliatory measures in detail. The meeting will take place on the sidelines of the World Economic Forum (WEF) in Davos, which is expected to be attended by Donald Trump.
When Trump announced the tariffs on "Liberation Day" last year, European leaders, many of whom are NATO allies, hesitated for a long time to respond in kind. They hoped to maintain the United States' participation in the military alliance and especially support for Ukraine. However, the president's decision to openly link trade issues with security forces them to reconsider their position.
"This time it seems that the European Union has to react somehow. The price he is paying for the support of the United States in the context of NATO and Ukraine is becoming too high," said Mujtaba Rahman, Managing Director for Europe at Eurasia Group consulting firm.
However, according to him, the European Union is unlikely to take any serious steps before the new tariffs take effect, which Trump has said will happen on February 1.
Here are some of the possible actions of the EU:
Postpone tariff cuts "to zero" on many American goods
The European Union, a single economic bloc with 450 million consumers, is America's largest trading partner in the region.
Last summer, the bloc concluded an unfavorable trade agreement with the United States, which imposed duties of 15% on most goods imported from the EU to the United States. In return, it was proposed to cancel existing tariffs on many American goods imported into the EU.
The European Parliament has yet to approve this reduction. On Saturday, following President Donald Trump's threat to impose tariffs, some of the parliament's most influential political groups called for the ratification process to be suspended.
The introduction of new retaliatory duties on some American goods
The European Union has prepared a list of more than a hundred billion dollars worth of American goods on which it could impose duties in response to last year's actions by US President Donald Trump. This list includes items such as chewing gum, motorcycles, and peanut butter. However, after the European Union and the United States concluded a trade agreement under which the duties that Trump had threatened were halved, the introduction of these measures was postponed.
Now that some countries are threatened with new tariffs of 10%, which will rise to 25% in June, the bloc may return to reviewing this list.
Retaliatory measures may displease the Trump administration and lead to an escalation of the tit-for-tat conflict. However, according to analysts, the economic restrictions due to Greenland may be enough to force the bloc to impose retaliatory duties.
The use of bazookas to protect against coercion in trade
In general, the EU's proposed tool to counter trade coercion would give the bloc significant leeway, including export controls, tariffs on services, restrictions on intellectual property rights, and restrictions on American companies from participating in tenders for government contracts in Europe.
It is based on the EU regulation, which came into force more than two years ago, but has never been used to impose trade sanctions before. According to this law, the European Union can officially declare the actions of another country as economic coercion. Such a move would pave the way for a wide range of economic retaliatory measures if the alleged coercion is not stopped.
"If there is a situation that justifies the use of a tool aimed at countering coercion, then this is it," said Ignacio García Bercero, a former EU trade official, referring to Trump's threat to impose tariffs over Greenland.
To use this tool against the United States, the European Commission, the executive body of the European Union, needs the approval of just over half of all member states, in which at least 65% of the total population of the bloc must live. However, as the European diplomat said on Sunday, even broader support will be needed for this step to be politically acceptable.
Once the instrument is implemented, the EU will be able to respond more flexibly to changes in trade relations.
Strengthening defense and closing American bases
Some European Union leaders, many of whom are also members of NATO, fear that if the bloc allows Trump to take control of Greenland, other European territories may follow. It also poses a threat to the integrity of the military alliance and could have serious consequences for Ukraine.
Europe could expand its military presence in Greenland, accelerate the implementation of plans to increase defense spending, or even consider the possibility of reorienting part of the procurement of military equipment from the United States. However, it should be recognized that many critically important weapons and military systems are manufactured exclusively in America, and Europe faces certain difficulties in strengthening its own military-industrial base.
As a last resort, Europe could consider limiting or completely rejecting the use of military bases by the United States on its territory. In particular, we are talking about the large Ramstein airbase in Germany, where more than 12,000 American military personnel and civilian specialists work. Such a response would sharply escalate tensions and could prompt Trump to withdraw American troops from the continent, which both sides say no one wants right now.
Strengthening cooperation with the rest of the world
In light of the new tariffs imposed by President Trump, the bloc has once again begun actively seeking opportunities to conclude trade agreements with other countries. This is due to the desire to reduce dependence on the United States. On Saturday, the European Union signed a trade agreement with four South American countries. On the same day, Donald Trump threatened to impose new import duties due to the situation around Greenland. The European Union is planning to announce a trade agreement with India this month. In addition, there is a possibility that a similar deal will be concluded with Australia.
Trump's latest threat may also force the EU to reconsider its "risk mitigation" strategy towards China. This strategy implies a tougher stance by the bloc towards the import of subsidized Chinese goods and the restrictions that China imposes on European companies.
