The European Union (EU) is readying its powerful service industry “bazooka” to hit U.S. tech giants in the event of a trade war with Washington, potentially leaving the likes of Alphabet (GOOGL) and Meta Platforms (META) in the firing line.
Maximize Your Portfolio with Data Driven Insights:
- Leverage the power of TipRanks' Smart Score, a data-driven tool to help you uncover top performing stocks and make informed investment decisions.
- Monitor your stock picks and compare them to top Wall Street Analysts' recommendations with Your Smart Portfolio
Faced with a fight on tariffs with the U.S., the Financial Times reports officials are looking to use the “anti-coercion instrument” (ACI), a powerful tool to target American services industries, including big tech.
META and GOOGL Could Be First in Line
The ACI, once dubbed the EU’s “bazooka” in terms of fighting economic battles, was devised in 2023 as a deterrent to China but now could now form a key part of Europe’s defense against U.S. trade measures.
It gives the EU a wide range of possible countermeasures against economic “coercion,” including the imposition of tariffs, restrictions on trade in services and trade-related aspects of intellectual property rights, and restrictions on access to foreign direct investment and public procurement.
The emphasis on restricting trade in services could have significant implications for Silicon Valley firms such as GOOGL and META operating in the EU, which is a significant source of revenues for both companies. Both have also been the subject of regulatory investigations, antitrust probes and fines, making them perhaps among the likeliest to face retrictions should the EU use the ACI.
It could also impact the likes of Amazon (AMZN), Apple (AAPL) and Microsoft (MSFT).
Trump Aims at EU
President Trump that tariffs on EU goods “will definitely happen,” as he levelled accusations at a range of trading partners ahead of announcing 25% tariffs on Mexico and Canada.
Those tariffs have been delayed by a month, but an additional 10% levy on goods from China is going ahead.
For the EU, the question is one of deterrence. While it does not want to escalate the situation, it has made it clear that it “would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods.”
Is GOOGL Stock a Buy?
The stock of Alphabet has a consensus Moderate Buy rating among 29 Wall Street analysts. That rating is based on 21 Buy and eight Hold recommendations assigned in the last three months. The average GOOGL price target of $218.75 implies 6% upside from current levels.
