The European Union (EU) promised “firm and proportionate countermeasures” after the U.S. slapped 25% tariffs on all imports of steel and aluminium, potentially leaving big tech stocks such as Meta Platforms (META) and Alphabet (GOOGL) in the firing line.
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“Unjustified tariffs on the EU will not go unanswered – they will trigger firm and proportionate countermeasures,” said European Commission president Ursula von der Leyen.
“The EU will act to safeguard its economic interests. We will protect our workers, businesses and consumers.”
Meanwhile German chancellor Olaf Scholz said the EU “will respond as one,” to U.S. tariffs.
What Could the EU Response Be?
Measures could include the “anti-coercion instrument” (ACI), a powerful tool that 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.
In 2018, the EU imposed “rebalancing measures” in response to the U.S. tariffs on steel and aluminium. These included tariffs on Harley Davidsons (HOG), jeans, lighters, orange juice and bourbon whiskey.
However, the creation of the ACI enables the EU to more easily restrict trade in services, which could have significant implications for Silicon Valley firms such as GOOGL and META. The Financial Times reported last week that officials in Brussels were looking at how they could use the ACI in any potential dispute with Washington.
Nevertheless, it is unclear whether the EU would seek to use this instrument immediately, as it could be seen to escalate the trade stand-off at a time when the bloc would prefer not to engage in a damaging economic war with the U.S.
“I hope that we are spared the misguided path of tariffs and counter tariffs. In the end, trade wars always cost both sides prosperity,” added German chancellor Scholz.
Is GOOGL Stock a Buy?
GOOGL has a consensus Moderate Buy rating among 37 Wall Street analysts. That rating is based on 27 Buy and 10 Hold recommendations assigned in the last three months. The average GOOGL price target of $215.85 implies 15% upside from current levels.
