Europe's 'trade bazooka': should business take activation of the EU Anti-Coercion Instrument seriously?

With Donald Trump  threatening sweeping tariffs on foreign goods, including 30% on EU exports, the French president, Emmanuel Macron , has publicly urged the European Commission to prepare to activate its Anti-Coercion Instrument (ACI), also known as the EU's trade bazooka and referred to by some as its "nuclear weapon". It would be the first time this mechanism is deployed. 

The call has reignited debate across the EU about whether Europe is ready to defend its economic sovereignty with legal countermeasures. While the Commission's president, Ursula von der Leyen, has counselled caution, the fact that deployment is even on the table is a geopolitical signal. For multinationals operating in or with the EU, the ACI is no longer a theoretical instrument but is now part of the real-world legal and commercial risk landscape.

What is the Anti-Coercion Instrument?

Adopted in 2023, Regulation 2023/2675 concerning the ACI gives the EU a structured legal mechanism to respond to economic pressure from non-EU countries seeking to influence its policy decisions. In other words, it forms the EU's shield against trade blackmail. Unlike traditional trade defence instruments, the ACI does not require a breach of World Trade Organization (WTO) rules. Instead, it focuses on the intent behind a third country’s actions: specifically, whether they are designed to coerce the EU or one of its Member States into a specific direction.

Once coercion is identified and dialogue proves ineffective, the Commission can propose countermeasures such as new tariffs, as well as restrictions to services, on access of foreign direct investment, on protection of intellectual property or its commercial exploitation, and on access to Union capital markets and other financial activities or procurement exclusions.  The process is guided by an objective assessment but leaves space for political discretion, reflecting the hybrid legal-strategic nature of the tool.

Crucially, the ACI aims primarily to deter by threatening to raise the cost of interfering in the EU’s sovereign decision-making.

Why does the ACI matter now?

Geopolitical uncertainty is giving the ACI real traction.

President Macron’s call to ready the ACI in response to US tariff threats underlines why this instrument was created in the first place. The EU is once again facing a moment where economic coercion is not theoretical. If the Trump administration follows through on its proposed 30% tariff for EU exports, the EU will have to choose between strategic passivity and coordinated response.

In the past, the EU often relied on WTO dispute settlement or quiet diplomacy. But recent years have shown that these approaches can be too slow or ineffective, particularly when the coercive intent is clear but the measures themselves fall into grey legal territory.

Targets of the countermeasures

Response measures adopted by the Commission either have general application or apply to certain natural or legal persons connected or linked to the government of the third country attempting the coercion. Measures that specifically target particular sectors, regions or operators of the third country are considered as of general application. 

A company providing services in the EU may be considered to be a national of an EU Member State for the purposes of the ACI if it has a commercial presence in the EU and is engaged in substantive business operations in the territory of the Member State in which the legal entity providing the service is established.  As such, the EU subsidiaries of a non-EU company can (if they satisfy these conditions) be regarded as EU nationals and will no longer be considered to be an "operator of the third country". Consequently, the services provided by these companies would, in principle, fall outside the scope of the ACI.

But EU subsidiaries of non-EU companies are not entirely safe: as a measure of last resort, the ACI also includes a possibility to adopt response measures against services supplied within the EU by one or more legal persons established in the Union but owned by persons of the third country. 

Implications for business

Although designed to confront state actors, the EU's trade bazooka will inevitably impact business if launched. Multinational companies could find themselves caught between retaliatory measures and market-access risk. For example, should the EU impose tariffs or procurement restrictions on a coercing country, businesses that rely on US-origin inputs, technology or financing could face real disruptions. They are likely to be faced with decreasing exports to the US. 

Moreover, the ACI’s investigatory phase includes stakeholder engagement, meaning that companies could be asked to provide information or positions on politically charged issues. This adds a new dimension to legal compliance and stakeholder management. Multinational companies operating on both sides of the Atlantic, in particular, will have to monitor this diligently, not only to mitigate risk but also to position their business as a responsible and informed partner in the EU’s evolving trade landscape.

Strategic autonomy in action

The ACI is not an isolated tool. It sits alongside a growing arsenal of EU legal instruments designed to bolster its strategic autonomy. These include the Foreign Subsidies Regulation, the International Procurement Instrument and new rules on outbound investment screening. Together, they signal a transformation in the EU’s approach to global economic engagement, one that blends openness with resilience.

The ACI is particularly emblematic of this shift. It reflects the recognition that economic interdependence can be weaponised and that rules-based trade policies must be backed by credible deterrents. By codifying when and how the EU can push back against coercion, the ACI also strengthens the Union’s negotiating position in broader geopolitical dialogues, from transatlantic tech alliances to Indo-Pacific supply chain partnerships.

Osborne Clarke comment

As global trade becomes more confrontational, the EU’s Anti-Coercion Instrument is likely to no longer remain a footnote in regulatory briefings but rather to become a centrepiece. While this trade weapon is primarily meant as an instrument for deterrence and deployment of the "bazooka" is unlikely, companies operating across jurisdictions should nevertheless familiarise themselves with its mechanics, monitor early warning signs of coercion investigations and prepare for legal or operational impact. With political momentum growing and deployment becoming a popular topic of discussion, the time to assess one's exposure is now.

If your business would benefit from a tailored ACI impact assessment or a strategic briefing on EU trade defence tools, please contact our International Trade team.