"As tensions simmer between the European Union and the U.S. over the Trump administration's trade policies and its play for Greenland, we've been hearing about the EU's economic "bazooka." What is it? AILSA CHANG, HOST: Things are quite tense right now between the U.S. and the European Union. Sources of that tension include the Trump administration's trade policies and its play for Greenland, which, in turn, has led to talk about the EU's anticoercion mechanism, also known as its economic bazooka."
"WIGGLESWORTH: Well, it's essentially sort of measures that can go beyond just trade tariffs. So they can be individual measures on companies, maybe banning access altogether, like maybe an extremist saying that Amazon can no longer operate in Europe, for example. So that's why they'd like to call it a bazooka. But of course, you know, the bazooka's only useful if you actually fire it."
"WOODS: It's like a bazooka that has a big ricochet 'cause it'd also affect Europeans. WIGGLESWORTH: Yes. I mean, the idea behind them is that it should maximize pain on the other side and minimize pain in Europe. But, of course, you know, you can't minimize the pain entirely. It has an impact. For example, if you were to, let's say, ban X - or Twitter as it used to be called - from operating in Eu"
The EU's anticoercion mechanism enables a range of responses beyond tariffs, including targeted measures against specific companies and even bans on market access. Policymakers aim to impose maximum economic pain on counterparties while minimizing damage to European firms and consumers. Practical deployment carries reciprocal costs and potential collateral damage to EU businesses and markets. Legal constraints, economic interdependence, and political will influence whether and how the mechanism is used. The instrument functions as both a deterrent and a punitive option, with credibility depending on demonstrated willingness to implement disruptive measures.
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