{"id":394743,"date":"2026-01-28T09:28:08","date_gmt":"2026-01-28T09:28:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/394743\/"},"modified":"2026-01-28T09:28:08","modified_gmt":"2026-01-28T09:28:08","slug":"could-europe-trigger-a-debt-crisis-in-the-u-s","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/394743\/","title":{"rendered":"Could Europe trigger a debt crisis in the U.S.?"},"content":{"rendered":"

Former European Commission President Jos\u00e9 Manuel Barroso recently claimed that relations between Europe and the United States<\/a> are at their lowest point since NATO\u2019s founding. <\/p>\n

It\u2019s hard to disagree, especially in light of former President Donald Trump\u2019s recent remarks, such as that \u201cEurope was created to harm the United States\u201d and that the U.S. has \u201cnever needed\u201d its NATO allies. Add to that last year\u2019s 15% tariffs on EU goods and the recent U.S. interest in claiming parts, if not all, of Greenland.<\/p>\n

Against this backdrop, theories have begun to emerge about how Europe might respond.<\/p>\n

The tool often mentioned is the Anti-Coercion Instrument, also known as the \u201ctrade bazooka.\u201d In its most aggressive form, it could severely restrict U.S. companies\u2019 access to the EU\u2019s 450-million-consumer market \u2014 a move that could cost them billions of dollars, with inevitable repercussions for the S&P 500<\/a>, Treasury yields, and the EUR\/USD pair<\/a>, while potentially benefiting gold.<\/p>\n

That said, the instrument is far from a quick trigger. Activating it would take up to six months, making it more of a strategic threat than an immediate weapon. More importantly, its purpose is deterrence, not escalation. If actually deployed, U.S. retaliation would be likely \u2014 for example, through restrictions on LNG exports to Europe, which could reignite an energy crisis and hit European industry and growth hard.<\/p>\n

Another theory is that Europe could begin selling its U.S. asset holdings.<\/p>\n

Europe does hold trillions of dollars in U.S. Treasuries, corporate bonds, and stocks. In theory, a coordinated sell-off could push up U.S. borrowing costs, weaken markets, and stir more volatility in the dollar \u2014 even sending EUR\/USD higher. The problem is that most of these assets are in private hands, so forcing a sale would hurt Europe just as much. Capital controls or restrictions would only make that damage worse.<\/p>\n

In short, Europe has the tools to cause pain to the U.S., thereby putting pressure on the U.S. debt and stock markets. But using them would be costly for Europe itself. That\u2019s why Brussels is far more likely to try every diplomatic option before turning economic leverage into open confrontation.<\/p>\n

On the other hand, Europe might not need to do anything. Markets could react on their own to worsening U.S.\u2013Europe relations and to countries moving away from dollar assets, potentially forcing the president into another \u201cTACO\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Former European Commission President Jos\u00e9 Manuel Barroso recently claimed that relations between Europe and the United States are…\n","protected":false},"author":2,"featured_media":394744,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-394743","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/394743","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=394743"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/394743\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/394744"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=394743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=394743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=394743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}