February 22, 2026 – The European Union is not bluffing. That is the message Paris sent this week, as France’s trade minister called for a coordinated EU response to Washington’s latest tariff escalation.
Nicolas Forissier told the Financial Times that the EU has the tools to retaliate. He urged member states to adopt a united front. His comments followed a U.S. Supreme Court ruling that struck down many of President Donald Trump’s existing tariffs as illegal.
Trump responded swiftly. He announced an additional 10% levy on all imports, later raised to 15%. The move rattled global markets and drew sharp reactions from major trading partners.
The EU’s Retaliation Toolkit
Analysts are closely watching one weapon in particular: the Anti-Coercion Instrument (ACI). This is the EU’s so-called ‘trade bazooka’. It gives Brussels broad powers from export controls to service tariffs. It can also bar U.S. companies from EU government procurement contracts.
A separate package of retaliatory tariffs on over €90 billion in U.S. goods also remains in reserve. This suspended package could be deployed quickly if negotiations fail.
The Economic Cost of Tariffs
The damage from tariffs is already measurable. Fabio Panetta, Governor of the Bank of Italy, said tariffs have contributed over half a percentage point to U.S. inflation. That figure remains above the Federal Reserve’s 2% target, sitting at 2.4% in January.
Initially, U.S. businesses absorbed the cost. Now, consumers are paying roughly half the burden. That dynamic is politically significant heading into an election cycle.
Germany Seeks Dialogue With a Fallback
German Chancellor Friedrich Merz is taking a diplomatic approach. He plans to visit Washington in early March to raise concerns directly. He welcomed the court ruling as evidence that U.S. checks and balances still function.
Still, Berlin is coordinating closely with Brussels. Germany’s export-heavy economy cannot afford a prolonged trade war with its largest non-EU partner.
Global Ripple Effects
The uncertainty is spreading far beyond Europe. South Korea flagged increased trade instability. India is reviewing its recently announced framework deal with Washington. Indonesia finalised a trade agreement with the U.S. this week but cautioned that ratification is not guaranteed.
Japan, the first major economy to strike a tariff deal with Trump, is unlikely to walk back its agreement. But the latest escalation adds uncertainty ahead of a planned Trump-Takaichi summit.
