In recent years, global trade tensions have become more pronounced. One key player in these tensions is the U.S. and its tariff policies, especially under former President Donald Trump.
His “reciprocal” tariffs targeted various regions, including Europe. While Europe has a significant trade surplus with the U.S. in goods, it faces a large deficit in services.
This situation creates a unique dynamic, and Europe is not without ways to fight back.
The trade relationship between the U.S. and the EU shows that Europe has a surplus of around 150 billion euros in goods, writes El Economista.
However, in services, Europe suffers a deficit of about 110 billion euros. A big portion of this deficit is due to Europe's reliance on American companies in sectors like communications, healthcare, and industry.
Europe is a vital market for major U.S. tech companies, often referred to as the "Magnificent Seven."
These companies have a strong presence in Europe, and this is something Europe can leverage in trade disputes.
One of Europe’s key strategies is the anti-coercion mechanism. This tool was created in 2021 in response to previous tariff conflicts with the U.S.
It allows the EU to take action if 55% of EU countries, representing at least 65% of the population, support such a decision.
This mechanism gives Europe the power to retaliate against U.S. tariffs. The EU could impose tariffs on American digital services, hitting the U.S. tech giants where it hurts.
Europe has used this strategy in the past, successfully pushing back against U.S. tariffs during Trump’s first term. Washington eventually backed down from plans to tax exports to Europe.
Now, as trade tensions with the U.S. continue, it’s clear that Europe has tools at its disposal.
The EU must act decisively and use these measures to protect its interests and push back against any unfair tariffs from the U.S.
