Europe and the United States are sliding into a fresh and unusually personal trade standoff — one sparked not by steel, tech, or subsidies, but by Greenland.
Over the weekend, U.S. President Donald Trump reignited global markets and diplomatic nerves by threatening new tariffs on eight European allies unless they agree to let Washington “buy” Greenland, the mineral-rich Arctic territory governed by Denmark. The message was blunt: no deal, no mercy at the border.
A Tariff Timeline That Shook Europe
According to Trump’s announcement, tariffs would begin at 10% on February 1 and sharply escalate to 25% by June 1 if Europe refuses to negotiate. The proposed measures would hit Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland, piling on top of existing U.S. duties already reaching 10% for the U.K. and 15% for the EU.
European capitals reacted swiftly — and angrily.
Emergency Talks and a “Big Bazooka”
On Sunday, senior diplomats rushed into an emergency meeting in Brussels. At the center of the discussion: whether to deploy the EU’s most feared trade weapon — the Anti-Coercion Instrument (ACI).
Often described as the bloc’s “nuclear option,” the ACI would allow the EU to strike far beyond tariffs. If activated, it could:
Restrict U.S. companies’ access to EU public contracts
Impose export and import bans on goods and services
Limit U.S. foreign direct investment in Europe
The Financial Times reported that Brussels is also considering €93 billion ($108 billion) worth of retaliatory tariffs, a move that would mark one of the largest trade counterattacks in EU history.
Yet the ACI has never been used — and that’s where Europe’s internal divide becomes clear.
France Pushes, Germany Hesitates
France has emerged as the loudest advocate for a hard line. Finance Minister Roland Lescure said the EU “must be prepared” to use the anti-coercion mechanism, framing Trump’s tactics as economic intimidation.
Germany, however, remains cautious. As Europe’s export powerhouse, Berlin fears escalation could boomerang back onto its own economy. Analysts note that France’s relative independence from exports — and its push for greater European strategic autonomy — helps explain the split.
“The key question,” said Teneo’s Carsten Nickel, “is whether Europe keeps this a classic trade war, or whether calls for a harsher response prevail.”
Greenland Takes to the Streets
The controversy has spilled beyond boardrooms and summits. In Copenhagen, protesters waved Greenlandic flags outside the U.S. embassy, chanting “Hands off Greenland” and “Greenland for Greenlanders.” The demonstrations underscored a central European position: Greenland is not for sale.
Trade Deals on Ice
The fallout is already disrupting existing agreements. Reuters reports that the European Parliament is now likely to delay ratifying the EU-U.S. trade deal agreed last July — a vote that was scheduled for late January and would have reduced many EU import duties on American goods.
Meanwhile, leaders from both sides are expected to use the World Economic Forum in Davos this week to seek a diplomatic off-ramp. Trump is set to address the forum on Wednesday, offering a potential — if uncertain — opening for dialogue.
Months of Uncertainty Ahead
Economists warn this dispute could linger far longer than past tariff scares.
“This isn’t a typical ‘Trump backs down’ situation,” said Mohit Kumar, chief European economist at Jefferies. “For Europe, Greenland is a red line. It’s not going away quickly — and that means months, possibly quarters, of uncertainty.”
For Europe, the stakes are clear: slower growth, volatile markets, and a strained alliance. For global investors, the message is equally stark — geopolitics is once again driving trade, and trade is once again driving markets.
What began as an extraordinary demand over a remote Arctic island now threatens to reshape transatlantic economic relations — and neither side appears ready to blink.