The European Union is examining for the first time the activation of the “ACI mechanism” (ACI), warning of retaliation for US services and companies, from Amazon and Microsoft to Uber and Netflix if there is no agreement with the US to prevent new duties.

A growing number of European Union member states, including Germany, are considering using extensive measures under the ACI mechanism against the US if the EU fails to reach a trade agreement with US President Donald Trump, according to European diplomats.

The EU coercion mechanism came into force at the end of 2023 and has not been used so far, as it is considered by many to be the “nuclear choice” in the block quiver.

What does ACI include

ACI allows the EU 27 states to retaliate against third countries exerting financial pressure to members to change policies and offers a much wider scope of action than ordinary US export duties.

ACI includes 10 points with possible measures against Trump’s threat to impose 30% on EU imports by August 1st.

In addition to tariffs on goods, ACI tools include restrictions on imports or exports of goods, such as through quotas or licenses.

For public tenders in the EU, totaling about 2 trillion euros a year, there are two options: First, bids based on more than 50% on US products or services (such as construction projects or defense equipment) could be excluded.

Secondly, US bids could be scored with a “penalty shootout” – that is, to be burdened with a negative score to reduce their chances of winning.

ACI could also lead to measures that affect the services in which the US maintains a surplus in trade with the EU, including digital services such as Amazon, Microsoft, Netflix or Uber.

Additional measures could include restrictions on direct foreign investment from the United States, which is the largest investor in the EU.

Further measures could relate to restrictions on the protection of intellectual property rights, access to financial markets and the possibility of selling chemicals or foods within the EU.

The EU must select measures that are more effective to prevent the coercive behavior of a third country and, if possible, to repair the damage caused.

How ACI is activated

The anti-forced mechanism (ACI) was proposed in 2021 in response to the criticism of EU member states that the first Trump and China government used trade as a political tool. According to Lithuanian officials, China had targeted Lithuania when it allowed the Taiwan Embassy to be established in Vilnius.

The law gives the European Commission a deadline of up to four months to examine potential incidents of coercion. If he finds that third-country measures are forced, he refers the case to the Member States, which have another 8 to 10 weeks to validate the conclusion.

Validation requires a special majority, that is, a stricter procedure than to impose simple retaliation, such as duties.

The Commission then proceeds, as a rule, to consult with that third country, with the aim of terminating forced behavior. If the consultations fail, within six months it may adopt EU response measures, which are re-subject to the vote of the Member States. These measures are expected to be implemented within three months.

The whole process may take up to one year, but it is projected to accelerate it.