Trump scared of ‘trade bazooka’!Image Credit source: ai generated
It is becoming difficult even for big political pundits to predict what American President Donald will say and when he will go back on his own statements. Just some time ago, the whole world was shocked when Trump started talking about occupying Greenland. Trump had made it clear that if any country opposed his attempt to acquire Greenland, it would have to face American tariffs.
This statement had taken the tension between America and European countries to its peak. It seemed that a new trade war was about to start. But, suddenly the tables turned at the Davos conference. Trump, who was showing his attitude till yesterday, suddenly softened his tone. He not only refused to use force against Greenland, but also withdrew his threat to impose a 10% tariff on European countries. What happened overnight? According to experts, behind this ‘U-turn’ of Trump is the ‘Trade Bazooka’ of Europe, the fear of which has forced America to think.
Trade bazooka is Europe’s ‘economic missile’
‘Trade Bazooka’ is not a cannon or missile, but a very powerful economic weapon of the European Union (EU). In technical language it is called ‘Anti-Coercion Instrument’ (ACI). You can consider it as the ‘Brahmastra’ of Europe. When a country tries to suppress any EU member country or its companies using its power, then this weapon is used in response.
French President Emmanuel Macron named it ‘Trade Bazooka’ because its firepower is very deep. This weapon directly attacks the economy of the opposing country. Under this, the EU can completely stop or limit the import and export of goods and services coming from that country. Not only this, this weapon can also curb foreign investment.
Why is America afraid of trade bazooka?
Trump is also a businessman and he knows what messing with Europe could mean. If the EU had pressed the trigger of this ‘bazooka’, the American economy could have suffered a severe blow. The most dire effect of this action would have been that the doors of the huge European market with 450 million (45 crore) customers could have been closed forever for American companies.
American companies could have been prevented from participating in EU government tenders. Obviously, this would have proved to be a loss of billions of dollars for America. The European Union, shaken by Trump’s threats, had also made full preparations for retaliatory action. The EU had indicated that they would not hesitate to use their financial weapons against America. Perhaps this was the reason why Trump had to step back in Davos.
Lesson learned from China’s actions
The story of making this weapon is also quite interesting. In the year 2021, when China started trade bullying with Lithuania, the EU had invented this weapon. At that time, Lithuania had improved its relations with Taiwan, angered by which China had imposed trade sanctions on it. At the same time, the European Commission decided that there should be a concrete mechanism to deal with any such blackmailing in future.
The Commission believes that the real purpose of ACI i.e. this trade bazooka is not to use it, but to create ‘fear’ of it. This weapon is considered most successful only when there is no need to use it and the opposite country retreats only due to fear of it. The same strategy seems to have proved effective in Trump’s case also.