\n<\/p>\n
A protester takes part in a demonstration to show support for Greenland in Copenhagen, Denmark, on Jan. 17, 2026.<\/p>\n
Tom Little | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
European states are reportedly considering retaliatory tariffs and broader punitive economic counter-measures against the U.S. after President Donald Trump threatened fresh export levies, deepening a rift over Greenland.<\/p>\n
Trump announced Saturday that\u00a0eight European countries would face increasing tariffs<\/a>, starting at 10% on Feb. 1 and rising to 25% on June 1, if a deal is not reached allowing Washington to acquire Greenland<\/a>, the mineral-rich island which is a semi-autonomous territory of Denmark.<\/p>\n The proposed tariffs would target Denmark, Norway, Sweden, France, Germany, the U.K, the Netherlands and Finland. The duties would come on top of existing export tariffs to the U.S., currently standing at 10% for the U.K. and 15% for the EU. <\/p>\n Regional diplomats held an emergency meeting in Brussels on Sunday afternoon to discuss their response to Trump\u2019s threat to escalate tariffs, with France reportedly pushing for the EU to use its strongest economic counter-threat to the U.S., known as the \u201cAnti-Coercion Instrument\u201d (ACI).<\/p>\n The much-vaunted instrument is seen as a nuclear option when it comes to economic counter-measures as it could see the EU restrict U.S. suppliers\u2019 access to the EU market, excluding them from participation in public tenders in the bloc, as well as putting export and import restrictions on goods and services, and limits on foreign direct investment in the region.<\/p>\n Despite being seen as a \u201cbig bazooka\u201d against Trump\u2019s tariffs playbook<\/a>, it has not been used before, and regional leaders have already said they want to pursue dialogue with the U.S. in the coming days to resolve the rift over Greenland.<\/p>\n The Financial Times reported that the EU was considering imposing 93 billion euros ($108 billion) worth of tariffs<\/a>, as well as considering the use of the ACI. Meanwhile, Reuters reported that the European Parliament will likely now\u00a0suspend its work\u00a0on the\u00a0EU-U.S. trade deal<\/a>\u00a0struck last July. <\/p>\n The assembly had been due to vote on removing many EU import duties on U.S. goods on Jan. 26-27, but that approval could now be delayed, Reuters reported<\/a>.<\/p>\n<\/div>\n While France is more gung-ho about the ACI, Germany is among the countries that have tended to shy away from using it before.<\/p>\n \u201cThe key question to watch is whether the EU will try to keep the confrontation confined to such a more \u201cclassic\u201d trade war, or whether calls for a harsher line prevail,\u201d Carsten Nickel, deputy director of Research at Teneo, said in emailed comments. <\/p>\n \u201cRepresenting the latter camp, France has called on its partners to formally invoke the EU\u2019s so-called\u00a0anti-coercion\u00a0instrument \u2026 [but] other EU member states, including Germany, will likely remain careful.\u201d <\/p>\n The reasons for this divide are multifaceted, Nickel noted, including factors such as France traditionally advocating for a more independent European role in continental security, and it being less export-dependent than other nations like Germany.<\/p>\n<\/div>\n European leaders were quick to react to Trump\u2019s surprise tariff threat, with U.K. Prime Minister Keir Starmer commenting Saturday that \u201capplying tariffs on allies for pursuing the collective security of NATO allies is completely wrong,\u201d while French President Emmanuel Macron\u00a0described them as \u201cunacceptable.\u201d<\/a><\/p>\n Nonetheless, leaders are expected to use the World Economic Forum taking place in Davos, Switzerland<\/a>, this week, as an opportunity to try to talk to Trump, who is addressing the forum on Wednesday.<\/p>\n<\/div>\n President Donald Trump attends a bilateral meeting with European Commission President Ursula von der Leyen during the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 21, 2020. <\/p>\n Jonathan Ernst | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n Economists warn that, much like last year when months of wrangling took place before a trade deal was signed between the U.S. and EU, this spring will likely be dominated by similarly thorny discussions over Greenland.<\/p>\n \u201cMy base case is that the Feb. 1 [tariffs] deadline is going to be postponed as diplomatic measures are implemented,\u201d Mohit Kumar, chief European economist at Jefferies, told CNBC Monday.<\/p>\n \u201cThat said, I think this is different from the usual TACO [Trump Always Chickens Out] trade. For Greenland, the position for Europe is very clear: it\u2019s not for sale, and they will not tolerate aggression \u2026 But what Trump has shown is that he wants Greenland. I don\u2019t see how the issue is going to go away that soon. So we are looking at\u00a0months, or potentially quarters, of uncertainty over tariffs.\u201d<\/p>\n \u201cFor Europe it\u2019s a negative. Growth will be reduced,\u201d he warned, ahead of what could be a frantic market day for European bourses on Monday, with regional indexes looking set to slump at the open<\/a>.<\/p>\n<\/div>\n<\/div>\n\nMonths of wrangling ahead?<\/h2>\n
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