Can Europe sell America?

Summary

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The Indicator from Planet Money

Episode Summary: "Can Europe sell America?"

Date: January 27, 2026
Hosts: Darian Woods, Waylon Wong
Guest: Robin Wigglesworth, Editor of FT Alphaville (Financial Times)

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Episode Overview

This episode explores the economic tensions between Europe and the United States, specifically whether Europe could use its financial muscle to "sell America" as leverage in response to strained political relations. The hosts discuss recent events, including symbolic divestments and the theoretical “anti coercion mechanism” that the EU could deploy against the US. Through an in-depth conversation with finance journalist Robin Wigglesworth, the show analyzes the plausibility and implications of Europe using its economic power to affect the US economy.

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Key Discussion Points & Insights

1. Recent Political Tensions and Shifts in Tone

• The show opens by referencing the decrease in tension between Europe and the US, noting that while some friction (like Trump and Greenland) has subsided, an "uneasy simmer" remains ([00:42]).
• Macron’s recent public statements at Davos are highlighted, particularly his advocacy for Europe’s use of economic tools to respond to “bullying” ([01:10]).

2. The "Anti Coercion Mechanism"—Europe's Economic Bazooka

• Definition: A legal tool allowing the EU to strike back against economic or political coercion by other states, potentially through means far beyond tariffs ([01:27], [04:31]).
• Potential Measures: Banning individual companies, severely restricting access for US giants like Amazon or X (formerly Twitter).
• Limitations: Considered a “bazooka” partly for show; reticence remains about using it due to the high probability of self-inflicted harm and the risk of US retaliation ([05:00]-[05:04]).
  • Memorable quote:

    “The bazooka is only useful if you actually fire. And that’s the question with Europe—whether it has the willingness to really sort of go nuts with the anti coercive measures.”
    — Robin Wigglesworth ([04:31])

3. The Specter of Financial Retaliation: Selling US Assets

• European institutions hold over $3 trillion in US Treasury bonds, making them America’s largest foreign lender ([06:02]).

• Compared with China’s $700 billion, Europe’s financial footprint in US debt markets is much larger than commonly assumed.

  • Discussion:
    • Europe could theoretically weaponize these holdings by selling US Treasuries—but this would likely backfire:
      • Selling would depress asset values, harming European investors as well ([06:52], [08:02]).
      • The assets are mostly held by private entities, not governments, making coordinated action difficult.

        “You’d be cutting off your nose to spite your face. It would trash the value of these American assets and hurt, of course, European investors in the process.”
        — Robin Wigglesworth ([08:02])

• Scenarios:

  1. Market-Led Divestment—European investors gradually grow more wary and slow their buying ([07:44]).
  2. Dramatic Government Mandate—Forcible sales, which Robin calls the “nuclear weapon,” seen as extremely unlikely due to complexity and mutual damage ([08:02]).
  • Summary quote:

    “Mutually assured destruction in Cold War terminology.”
    — Darian Woods ([09:01]) “Basically, yes.”
    — Robin Wigglesworth ([09:04])

4. Skepticism About Extreme Scenarios and Media Dynamics

• Robin finds the prospect of a major European divestment unlikely, in agreement with US Treasury Secretary Scott Besant, despite being labeled by Besant as “fake news.” ([09:23])

  • Notable moment:

    “It was a little bit weird for him to call us the fake news media when in this case we actually happen to agree with him.”
    — Robin Wigglesworth ([09:38])

• The idea originated in a Deutsche Bank analyst note, which Robin’s article critiqued as “outlandish” ([09:55]).

5. Tone and Personal Touches

• The episode includes playful banter about Macron’s sunglasses ([01:00]), the color of the Financial Times (salmon bisque pink, [03:51]), and Robin’s British-sounding Norwegian surname ([10:11]).
  • Fun exchange:

    “So it’s more British than Britain.”
    — Darian Woods ([10:28])
    “Exactly.”
    — Robin Wigglesworth ([10:30])

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Timestamps for Important Segments

• [00:42] — Setting the stage: Europe’s unease post-tensions with US
• [01:10] — Macron at Davos discusses Europe’s tools for economic self-defense
• [01:27]/[04:31] — Introduction and exploration of the anti coercion mechanism
• [06:02] — Europe’s holdings of US Treasuries are revealed
• [06:52]-[08:02] — Detailed analysis of what financial retaliation could look like, and its complications
• [09:23]-[09:49] — Robin Wigglesworth reacts to being called “fake news” by US Treasury Secretary
• [10:11]-[10:31] — Lighthearted discussion of Robin’s last name

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Notable Quotes

• “Europe has very strong tools now and we have to use them when we are not respected and when the rule of the game are not respected.”
  — Emmanuel Macron (paraphrased by Scott Besant), ([01:10])

• “It’s essentially measures that can go beyond just trade tariffs...”
  — Robin Wigglesworth on the anti coercion mechanism ([04:31])

• “Around $3 trillion or so is in the treasury market. So that probably makes Europe the single biggest holder of treasuries in the world outside of the US, of course.”
  — Robin Wigglesworth ([06:02])

• “You’d be cutting off your nose to spite your face...”
  — Robin Wigglesworth ([08:02])

• “Mutually assured destruction in Cold War terminology.”
  — Darian Woods ([09:01])

• “It was a little bit weird for him to call us the fake news media when in this case we actually happen to agree with him.”
  — Robin Wigglesworth ([09:38])

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Summary Takeaway

While Europe theoretically has powerful financial tools—like the anti coercion mechanism and its vast holdings of US assets—they are unlikely to be deployed in a way that would seriously hurt the US economy, due to the high risk of mutual economic harm. The episode settles on the conclusion that, despite the dramatic headlines, the probability of Europe “selling America” as a weapon is quite low.

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Transcript

[Darian Woods]

Planet Money is going on a book tour. Come see us live and hear stories from the upcoming Planet Money book and the making of it. Each stop has a special guest, economists, business owners, other podcast friends. It'll be a night of smart conversation and celebrating this book that we're really proud of. And we've got a giveaway going. You can get a limited edition tote bag with your ticket purchase while supplies last. Details on that and how to get tickets in our show notes. Hope to see you in Bassin soon.

[Robin Wigglesworth]

NPR.

[Darian Woods]

The boiling of tensions in Europe over US President Trump and Greenland have subsided to this somewhat uneasy simmer, but Europe is still on edge. Let's start with French President Emmanuel Macron last week on stage at Davos in his aviator sunglasses.

[Waylon Wong]

The sunglasses are for an eye condition, by the way.

[Darian Woods]

Okay, yes, we need to be clear about that. And Macron talked about the ways Europe could respond to bullying by other countries.

[Scott Besant]

Europe has very strong tools now and we have to use them when we are not respected and when the rule of the game are not respected. By the way, the anti coercion mechanism is a powerful instrument and we should not hesitate to deploy it in today's tough environment.

[Waylon Wong]

The anti coercion mechanism, sometimes called the EU's bazooka, this is a legal tool that the European Union could use to economically hit back at a country.

[Darian Woods]

Even without the anti coercion mechanism activated, some in Europe are already changing their behaviour. Last week, a Denmark teachers pension announced it would sell off about $100 million of U.S. government bonds. Down the hall in Davos, where U.S. treasury Secretary Scott Besant was speaking, he.

[Scott Besant]

Answered a question about this Denmark's investment in U.S. treasury bonds, like Denmark itself, is irrelevant.

[Darian Woods]

Though the Danish Pensions fund's chief investment officer claimed it wasn't directly because of Greenland friction, the mood is clear to many Europeans. Sell America. This is the indicator from Planet Money. I'm Darian Woods.

[Waylon Wong]

And I'm Waylon Wong. Today on the show, what economic weaponry does Europe have? Europe is moving from friends to frenemies with the US and so the continent is figuring out how to best pack a financial wallop that could lighten Americans wallets.

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[Darian Woods]

Us through how Europeans are thinking through their financial firepower, we spoke to a Norwegian finance reporter.

[Robin Wigglesworth]

My name is Robin Wigglesworth and I'm the editor of FT Alphaville, the FT's finance blog.

[Darian Woods]

The Financial Times the beautiful salmon coloured.

[Robin Wigglesworth]

Paper Salmon bisque pink. We've heard many shades over the years.

[Waylon Wong]

So last week Robin published an analysis of Europe's financial arsenal. He and his co author were responding to a research note that came out of Deutsche Bank. Somebody at Deutsche bank had pointed out how much the US relies on foreigners lending to it. The note described how Europe is America's largest lender. And so the note pondered why Europe would want to be supporting the US financially when it was being strong armed around issues like Greenland.

[Darian Woods]

We asked Robin his assessment of whether Europe could inflict financial pain on the us. We started with trying to understand exactly what this anti coercion mechanism means.

[Robin Wigglesworth]

Well, it's essentially sort of measures that can go beyond just trade tariffs so they can be individual measures on companies, maybe banning access altogether, like maybe an extremist saying that Amazon can no longer operate in Europe, for example. So that's why they like to call it a bazooka. But of course, you know, the bazooka is only useful if you actually far. And that's the question with Europe, whether it has the willingness to really sort of go nuts with the anti coercive measures.

[Darian Woods]

It's like a bazooka that has a big ricochet because it would also affect Europeans.

[Robin Wigglesworth]

Yes, I mean the idea behind them is that it should maximize pain on the other side and minimize pain in Europe. But of course you can't minimize the pain entirely. It has an impact. For example, if you were to let's say ban X or Twitter as it used to be called, from operating in Europe, you know, Europeans lose service, then there's obviously the danger of retaliation. With a face of erratic president in the White House, Europeans are wary of escalating things in a way that, you know, might Backfire in a very violent way.

[Waylon Wong]

So the anti coercion mechanism can go further than tariffs. But to my ear, Robyn seems a little skeptical that Europe's actually going to use it to great effect.

[Darian Woods]

I think that's fair. And that leads us to other ways Europe could squeeze the U.S. like Europe could sell off its U.S. treasury bonds. We asked Robin how big a deal this could be.

[Robin Wigglesworth]

Well, Europe, it's an old wealthy continent, we forget this, but it's super rich and they've saved up a lot of money, they export a lot, so they're invested in bonds and stock markets around the world, but nowhere more so than the United States. Around 3 trillion or so is in the treasury market. So that probably makes Europe the single biggest holder of Treasuries in the world outside of the us of course.

[Waylon Wong]

Mainland China, by the way, holds less than 700 billion worth of U.S. treasuries, at least according to the official statistics.

[Darian Woods]

That's interesting because historically, sometimes there's been chatter around, you know, could China weaponize its U.S. treasury holdings? Never really crossed many people's minds that could Europe weaponize its U.S. treasury holdings? But you're saying it's actually of comparable, if not bigger size?

[Robin Wigglesworth]

Yeah, we're through the looking glass here. These are things that we really didn't think we'd need ever to contemplate. But yes, as Europe kind of flails around for ways it can gain leverage in negotiations with the U.S. one of the things that some people have highlighted is this financial vulnerability in the United States that the US is constantly dependent on money coming into the country, you know, from Europe and Asia, but especially Europe. So could that be weaponised?

[Darian Woods]

So let's look at that as a broader picture. Stocks, bonds, direct investment. Could Europe hurt the US by divesting from the US economy?

[Robin Wigglesworth]

It could.

[Darian Woods]

Robin says it's helpful here to think about divestment. That could happen in two separate ways. One, European investors just generally get less enthused about investing in the us more.

[Robin Wigglesworth]

Pension plans, insurance companies and so on. Private investors think, do I really feel comfortable lending all this money into the us? Maybe not. Maybe I won't sell. Maybe I'll just stop buying more Treasuries. And that could be a problem in itself.

[Waylon Wong]

The second way Europe could sell America would be a big dramatic law mandating this.

[Robin Wigglesworth]

That's kind of the nuclear weapon. I'm skeptical just because it's immensely complicated. These US stocks and bonds aren't owned by the French government or the German government. Mostly it's like private Banks in Switzerland, Dutch pensions plans, insurance companies in the uk it's held in private sector hands, thousands if not millions of investors. And the only way to get them to forcibly dump American Treasuries or American stocks is by fairly draconian enaction of laws and regulations across the European Union. And that's why it's very complicated. And the danger is, of course, by doing so, you'd be cutting off your nose to spot your face. It would trash the value of these American assets and hurt, of course, European investors in the process. Now, that might be feasible or even worth swallowing if hostilities keep rising, but right now I think that's very far fetched.

[Darian Woods]

Mutually assured destruction in Cold War terminology.

[Robin Wigglesworth]

Basically, yes.

[Waylon Wong]

So, Darian, it sounds like Robin basically poured cold water over the more extreme scenarios that were outlined in that Deutsche Banknote.

[Darian Woods]

Yeah. And so Robin found it a little odd when he heard Treasury Secretary Scott Besant lump him in with the Deutsche Banknote later in that Davos talk.

[Scott Besant]

This notion that Europeans would be selling US Assets came from a single analyst at Deutsche Bank. Of course, the fake news media led by the Financial Times, amplified it.

[Sponsor/Ad Voice]

Well.

[Robin Wigglesworth]

Well, it's obviously great to hear that the US Treasury Secretary is reading our articles, but I thought it was a little bit weird for him to call us the fake news media when in this case we actually happen to agree with him.

[Sponsor/Ad Voice]

Right.

[Waylon Wong]

Because Robin did not think it was a major threat that Europeans would be selling a lot of US Treasuries.

[Darian Woods]

The subtitle of Robin Wigglesworth's article was Nipping an Outlandish Idea in the Bud.

[Sponsor/Ad Voice]

Oof.

[Waylon Wong]

Well, that public dressing down might explain why Deutsche bank declined to comment to us.

[Darian Woods]

Now, I don't usually make light of people's names, but on your social media you have. So tell me about your last name.

[Robin Wigglesworth]

So I am Norwegian. I'm born and raised here in Oslo, Norway. But my father's English and Wigglesworth is an outrageously English name. I mean, even British people think it's a bit weird.

[Sponsor/Ad Voice]

It's.

[Darian Woods]

So it's more British than Britain.

[Robin Wigglesworth]

Exactly.

[Sponsor/Ad Voice]

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