EU Nations Mulling $108B 'Nuclear Option' Against Trump's Tariff Threats

European nations are reportedly considering a "nuclear option" to impose $108 billion worth of tariffs against the United States in response to President Donald Trump's threat to enact stiff tariffs against eight nations if a deal is not reached to sell Greenland to the United States, but that move would be "unwise," Treasury Secretary Scott Bessent said in Davos on Tuesday.

France, during an emergency meeting in Brussels on Sunday afternoon, pushed for the European Union to use the "Anti-Coercion Instrument," described as a trade "bazooka" to deter Trump, CNBC reported Tuesday.

The EU's "instrument" has been designed to deter what it calls economic coercion that would push for policy changes that could affect investment and trade.

The retaliation could include "trade-related aspects of intellectual property rights" as well as public procurement, not only measures in financial and trade markets, in a range of options that have been called a nuclear option.

But Bessent, in Davos for the World Economic Forum, said that it would be "very unwise" for the EU to retaliate against Trump's tariff threats and that "everybody should take the president at his word."

Instead, countries and companies should "let things play out" in the wake of Trump's tariff threats, according to Bessent, The Guardian reported Tuesday.

He cited last year's tariff war between the United States and China, when Trump's "liberation day" tariff announcement rocked global stock markets before several companies agreed to trade deals.

Markets recovered to record highs in late 2025, partially because of the boom in artificial intelligence.

"The worst thing countries can do is escalate against the United States," Bessent said.

Not all of the EU nations agree with using the ACI, including Germany, whose economy depends more on exports, Carsten Nickel, the deputy director of Research at Teneo, told CNBC.

The sectors facing the most exposure to Trump's tariffs include the auto industry, including BMW in Germany and Stellantis in Milan, as well as the pharmaceutical giants Novo Nordisk and Roche in Switzerland.

On Monday, Germany and France called for a "clear" response from the EU to Trump's threats, reports The Financial Times.

"We will not be blackmailed," German Finance Minister Lars Klingbeil said.

Three EU officials briefed on the preparations said that European Commission officials have drawn up options for retaliation, but are holding back on the ACI in hopes that a diplomatic solution will be reached during talks with Trump this week in Davos.

"Our number one priority now is to really engage and cooperate and have a good dialogue with U.S. counterparts," Henna Virkkunen, vice president of the commission, told the FT.

"At the same time, we have also tools at our disposal here. We have prepared also for that," Virkkunen said.

The ACI would also allow the EU to limit American technology companies' access to the EU's internal market, said Virkkunen, stressing that the EU is the largest market for some tech groups.

European leaders are also hoping to persuade Trump that they will play a larger role in defending the Arctic against threats from Russia and China, including with Denmark and Greenland proposing a NATO mission on the island that would be similar to its operations protecting critical Baltic Sea infrastructure.

U.K. Prime Minister Keir Starmer, meanwhile, said he will use the "full strength of government at home and abroad" to defend international law, calling Trump's tariff threats "completely wrong."

The markets, meanwhile, have responded to Trump's tariff threats, with futures tied to the Dow Jones Industrial Average expected to open on Tuesday down 378 points.

On Monday, European stocks broadly fell while safe-haven assets gold and silver went to new highs days after breaking prior records.

The back-and-forth threats come as Denmark on Monday sent additional troops to Greenland, with Trump declining to rule out using military force to take control of the island.

Danish authorities said that a "substantial contribution" of soldiers and the head of its army have gone out to Greenland's capital in Nuuk and Kangerlussuaq.