AI Takeaways
Summary of key points generated with the help of artificial intelligence
- The idea that the Eurozone could deploy a “European bazooka” against U.S. pressure over Greenland is economically unrealistic.
- The EU’s largest trade surplus is with the United States, making a tariff war self-defeating.
- Europe has replaced cheap Russian gas with far more expensive U.S. LNG, deepening its dependency on Washington.
- A financial “bazooka” involving European capital invested in U.S. markets would trigger systemic market chaos.
- Any hint of capital controls or forced liquidations would destabilize both the euro and global financial markets.
- Europe’s threats function more as political signaling than as credible economic leverage.
In recent days, quiet conversations with “old friends” in the glass corridors where the Eurogroup meets have pointed to an uncomfortable conclusion: the idea that the Eurozone could activate a so-called European “bazooka” in response to Donald Trump’s threats over Greenland belongs firmly outside the realm of economic reality.
Despite signals from Berlin suggesting a more sympathetic stance toward Emmanuel Macron’s proposal ahead of the upcoming European Council, two hard economic arguments explain why such talk remains largely performative.
To understand why, one must first clarify what this much-discussed “bazooka” actually entails. It has two components: a highly publicized commercial arm and a far more sensitive, largely unspoken financial one.
The commercial element, drafted by the European Commission and well known to finance ministers—including the Greek finance minister in his role as Eurogroup president—envisions tariffs totaling €93 billion on selected U.S. goods and services. On paper, this appears formidable. In practice, it borders on economic self-harm.
Even after Trump’s tariff barrage in 2025, the European Union continues to run its largest trade surplus with the United States—the single biggest consumer market in the world. That surplus is precisely Trump’s strongest negotiating weapon, whether his tactics are economic or geopolitical. Against this backdrop, the notion that Europe would willingly “shoot” the market on which it depends most for exports is not just counterintuitive; for many EU member states, it is unthinkable.
The paradox deepens when energy is factored in. The same Europe now flirting with a trade confrontation is the one that deliberately replaced cheap Russian pipeline gas with U.S. liquefied natural gas—three to four times more expensive—triggering the most severe energy crisis in its postwar history. To threaten its new primary energy supplier, after having severed ties with the old one, is less a strategy than a self-inflicted vulnerability.
If this is not an economic paradox bordering on strategic folly, it is difficult to imagine what would qualify.
The second arm of the European “bazooka” is even more problematic. Over decades, Europe’s cumulative trade surpluses with the U.S. have generated between $8 trillion and $12 trillion—depending on methodology—now invested in American bonds, equities and financial instruments.
The mere institutional discussion of restricting, controlling or forcing the liquidation of these investments—effectively a form of selective capital controls—would amount to a financial earthquake of magnitude seven or eight. The consequences would be global, immediate and impossible to contain.
That is precisely why this option has not surfaced even in informal policy debates within EU institutions. Modern transatlantic markets are built on the free movement of capital, a principle that underpinned globalization since the 1980s. Simply signaling that Europe might “consider” interfering with these flows would likely trigger violent capital movements, destabilizing both U.S. and European markets.
Crucially, the damage would not stop there. U.S. and European financial systems function as communicating vessels. Any shock to one reverberates instantly through the other. Beyond asset markets, such a move would undermine the monetary architecture that tightly binds the euro to the dollar—an outcome profoundly harmful to Europe itself.
Seen through this lens, the obvious question is not whether Brussels has lost its nerve, but whether it is deliberately playing a game of transparent bluff. And it is a bluff Washington clearly does not buy.
That reality was captured succinctly by U.S. Treasury Secretary Scott Bessent, who, when asked whether he believed Europeans would deploy such measures, replied with a single word: “No.” He offered no elaboration—because none was necessary.
Europe’s “bazooka,” for all its rhetorical force, remains unloaded. And everyone in Washington knows it.
