Key points
- The US is poised to impose broad tariffs on global partners
- EU argues that its VAT is a fair, non-discriminatory tax
- The European Commission is not currently considering the anti-coercion instrument
ISLAMABAD: France has urged the European Union to consider using its most powerful retaliatory measure against the US for the first time, should President Donald Trump impose tariffs to unfairly pressure the bloc into policy changes.
France has aligned with a small group of EU countries that believe the so-called anti-coercion instrument — a mechanism designed to retaliate against nations using trade and economic measures coercively — should be considered, according to Bloomberg.
The US is poised to impose broad tariffs on global partners, including the EU, as soon as April 2. President Trump has stated that these tariffs aim to tackle non-tariff barriers he deems unfair, such as domestic regulations and the EU’s value-added tax (VAT).
Non-discriminatory tax
However, the EU argues that its VAT is a fair, non-discriminatory tax that applies equally to both domestic and imported goods.
The anti-coercion instrument, subject to various conditions and procedures, could eventually allow the EU to implement a wide range of retaliatory measures.
These could include restrictions on trade and services, as well as on intellectual property rights, foreign direct investment, and access to public procurement.
Earlier this month, Trump escalated the global trade conflict by imposing a 25 per cent tariff on steel and aluminium imports.
Reciprocal tariffs
In response, the EU announced its retaliatory tariffs on up to €26 billion ($28.1 billion) worth of politically sensitive US goods.
The forthcoming reciprocal tariffs, designed to counterbalance any perceived disadvantage for American companies, could exceed the duties on metals.
The European Commission, the EU’s executive body responsible for trade, is not currently considering the anti-coercion instrument, according to Investing.com.
Discussions about using the tool are distant, as the EU first needs to assess the tariffs the US will announce on April 2 and determine whether the anti-coercion instrument is applicable.
