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Threats from the White House over Greenland have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.
U.S. President Donald Trump said Saturday that he would charge a 10% import tax starting in February on goods from eight European nations because of their opposition to American control of Greenland.
Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland would face the tariff, Trump said in a social media post while at his golf club in West Palm Beach, Florida. The rate would climb to 25% on June 1 if no deal was in place for “the Complete and Total purchase of Greenland” by the United States, he wrote.
European leaders from Dublin to Helsinki quickly condemned the announcement as economic coercion and sent representatives to Brussels on Sunday for an emergency meeting.
If diplomacy fails, they have signaled a new willingness to wield the economic might of the 27-nation European Union.
“Our priority is to engage, not escalate. Sometimes the most responsible form of leadership is restraint,” said European Commission spokesperson Olof Gill on Monday. “The EU has tools at its disposal and is prepared to respond should the threatened tariffs be imposed.”
The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.
Trump, European Commission President Ursula von der Leyen, and other world leaders are now traveling to Davos for the annual World Economic Forum. No meetings are yet scheduled between European leaders and Trump.
After Davos, the 27 EU leaders will convene in Brussels Thursday evening for an emergency meeting on transatlantic relations.
President of the European Council António Costa said EU leaders agree “that tariffs would undermine transatlantic relations and are incompatible with the EU-U.S. trade agreement.”
U.S. Treasury Secretary Scott Bessent, speaking Monday to reporters in Davos, Switzerland, suggested that EU officials had been reaching out to the administration following Trump’s threat, noting “evidently there are a lot of inbounds.” When asked about potential retaliatory measures by the European bloc, Bessent warned: “I think it would be very unwise.”
Europe has multiple tools at its disposal but faces difficult choices, according to Penny Naas, senior vice president of the German Marshall Fund, a Washington-based think tank.
“It’s tough for the Europeans to find that space where they can both demonstrate strength without incurring significant retaliation. And as long as they’re unwilling to accept retaliation, they’re going to have trouble projecting strength,” she explained.
The EU has three major economic tools it could deploy: imposing new tariffs, suspending the U.S.-EU trade deal, or activating its “trade bazooka” – the unofficial term for the bloc’s Anti-Coercion Instrument that could sanction individuals or institutions found to be exerting undue pressure on the EU.
The EU and U.S. had agreed in June on a framework for a trade deal. It was scheduled for ratification by the European Parliament this week, but on Saturday, Manfred Weber, leader of the largest parliamentary group, said approval was “not possible at this stage.”
The EU could also levy tariffs on U.S. goods worth 93 billion euros ($108 billion) that it suspended after the July deal. However, commission spokesperson Gill said that unless that suspension is extended, those levies would automatically take effect on February 7 if the U.S. follows through on its tariff threat.
Ireland’s Minister of Finance Simon Harris cautioned against escalating tensions that might scupper the hard-won agreement. “This is a time for cool heads,” he said before a meeting of EU finance ministers in Brussels. “We worked very hard at an EU level to have a trade agreement in place with the United States… Anything that now moves away from that could have potentially very, very significant consequences.”
Europe’s biggest exports to the U.S. include pharmaceuticals, automobiles, aircraft, chemicals, medical instruments, and alcoholic beverages, all sectors that could face significant disruption from new tariffs.
In 2021, the European Commission established the Anti-Coercion Instrument after Beijing restricted trade with Lithuania over its ties with Taiwan. “The primary objective of the ACI is deterrence. The instrument will, therefore, be most successful if there is no need to use it,” according to a commission statement.
While many European capitals remain reluctant to employ the instrument for fear of escalation, France and Germany, the bloc’s two economic powerhouses, have indicated their support.
“Tariff threats are unacceptable and have no place in this context,” said French President Emmanuel Macron in a social media post. “Europeans will respond in a united and coordinated manner should they be confirmed. We will ensure that European sovereignty is upheld.”
Indirectly, the EU has been diversifying its economic relationships beyond the U.S. Brussels signed a major trade deal last week with the five Mercosur nations in South America, as well as separate agreements with Indonesia and Japan. EU officials are finalizing similar free trade deals with the United Arab Emirates and India, with von der Leyen expected in India in late January to conclude negotiations.
Gill highlighted that the India deal would cover nearly 2 billion people, and together with the Mercosur agreement, demonstrates the EU’s successful strategy amid global economic uncertainty.
“We can see very clearly that the value of responsible, mature leadership on the global stage is paying off in terms of the EU trade agenda, in terms of our efforts to diversify our trade partners and give ourselves the maximum economic potential from our partnerships around the globe,” he concluded.
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10 Comments
This dispute over Greenland highlights the complex web of economic and geopolitical interests at play. The EU’s challenge will be to navigate these waters skillfully, using a combination of diplomacy and, if needed, targeted economic measures to defend its position.
This situation highlights the need for nuanced, multilateral solutions to global challenges. The EU must carefully weigh its options, from diplomatic engagement to targeted economic responses, in order to protect its interests without unnecessarily escalating tensions.
The EU’s response to the U.S. stance on Greenland will be a test of its diplomatic and economic influence. Careful consideration of all options, from engagement to selective countermeasures, will be crucial in finding a constructive resolution to this complex geopolitical issue.
This dispute underscores the delicate balance between national interests and international cooperation. The EU must navigate this situation with a steady hand, using a combination of diplomatic finesse and economic leverage to protect its position without unnecessarily escalating tensions.
Greenland’s strategic importance is undeniable, but the EU must be careful not to get dragged into a tit-for-tat economic conflict. Prioritizing diplomacy while maintaining a credible deterrent could be the best path forward in this complex geopolitical landscape.
Tensions over Greenland certainly highlight the complex geopolitical landscape. While diplomacy should be the priority, the EU may need to consider economic countermeasures if negotiations fail. This will be a delicate balancing act, requiring nuance and restraint.
Greenland may be a strategic asset, but heavy-handed tactics are unlikely to produce a favorable outcome. The EU must tread carefully, seeking to de-escalate tensions through dialogue while maintaining the credible threat of retaliation if negotiations fail.
The U.S. stance on Greenland seems heavy-handed. While national interests are at play, unilateral action and trade threats are unlikely to resolve the issue constructively. The EU would be wise to pursue diplomatic solutions, but maintain the option of retaliation if necessary.
I agree. Diplomacy should be exhausted first, but the EU must be prepared to protect its economic interests if talks break down. Measured, proportionate responses may be required to deter further coercion.
The EU’s response to the U.S. position on Greenland will be a litmus test for its ability to assert its interests on the global stage. Diplomacy should be the first approach, but the willingness to employ economic countermeasures if needed will be an important signal.