Tap for article
EU readies €93bn tariffs in retaliation for Trump’s Greenland threat
Europe could also threaten to restrict US companies’ market access in run-up to crunch talks at Davos
Danish warships off Nuuk. A a rupture in the western military alliance over Greenland would pose an existential threat to Europe’s security © Getty Images
EU capitals are considering hitting the US with €93bn worth of tariffs or restricting American companies from the bloc’s market in response to Donald Trump’s threats to Nato allies opposed to his campaign to takeover Greenland. The move marks the most serious crisis in transatlantic relations for decades.
The retaliation measures are being drawn up to give European leaders leverage in pivotal meetings with the US president at the World Economic Forum in Davos this week, officials involved in the preparations said.
They are bidding to find a compromise that would avoid a deep rupture in the western military alliance, which would pose an existential threat to Europe’s security.
The tariff list was prepared last year but suspended until February 6 to avoid a full-blown trade war. Its reactivation was discussed on Sunday by the EU’s 27 ambassadors, along with the so-called anti-coercion instrument (ACI) that can limit the access of American companies to the internal market, as the bloc wrestled over how to respond to the US president’s threat with punitive tariffs.
Trump, who has demanded permission from Denmark to take control of Greenland, on Saturday evening vowed to impose 10 per cent tariffs by February 1 on goods from the UK, Norway and six EU countries that sent troops to the Arctic island for a military exercise this week.
“There are clear retaliation instruments at hand if this continues . . . [Trump’s] using pure mafioso methods,” said a European diplomat briefed on the discussion. “At the same time we want to publicly call for calm and give him an opportunity to climb down the ladder.”
“The messaging is . . . carrot and stick,” they added.
France has called for the bloc to hit back with the ACI, which has never been used since its adoption in 2023. The tool includes investment restrictions and can throttle exports of services such as those provided by US Big Tech companies in the EU.
Paris and Berlin are coordinating a joint response, with their respective finance ministers due to meet in Berlin on Monday before travelling to Brussels for a gathering with their European counterparts, a French ministry aide said. “The issue will also have to be broached with all G7 partners under France’s presidency,” the person added.
While many other EU member states have voiced support for exploring how the ACI could be deployed against the US, a majority called for dialogue with Trump before issuing direct threats of retaliation, diplomats briefed on the discussions told the FT.
“We need to get the temperature down,” said a second EU diplomat.
In a step towards retaliation, the biggest parties in the European parliament this weekend said they would delay a planned vote on measures that would have reduced EU tariffs on US goods as part of a trade agreement struck last year.
Trump, who will be at the Swiss forum on Wednesday and Thursday, is set to hold private talks with European leaders including European Commission President Ursula von der Leyen, in addition to participating in a wider discussion among western countries supporting Ukraine.
“We want to co-operate, and it is not we who are seeking conflict,” said Mette Frederiksen, Denmark’s prime minister.
National security advisers from western countries will meet in Davos on Monday afternoon. The talks were initially set to focus on Ukraine and ongoing peace talks to end Russia’s invasion of the country, but have been overhauled to give time to discuss the crisis over Greenland, two officials briefed on the preparations said.
The Swiss foreign ministry, which is hosting the gathering, said it “will not comment on participants or topics”.
Trump’s threats “certainly warrant the ACI as it would be textbook coercion”, said a third European official.
“But we need to use the time to February 1st to see if Trump is interested in an off-ramp,” they said, adding that much would depend on the outcome of the talks in Davos.
European officials said that they hoped their retaliation threats would increase bipartisan pressure in the US against Trump’s actions and result in him retreating from his tariff pledge.
“It is already a situation that no longer allows compromises, because we cannot hand over Greenland,” said a fourth European official. “The reasonable Americans also know that he has just opened Pandora’s Box.”
But on Sunday US Treasury secretary Scott Bessent said that Europe was too weak to guarantee Greenland’s security, and refused to back down on the US demand to take control of the strategically important island.
“The president believes enhanced security is not possible without Greenland being part of the US,” he told NBC News.
Additional reporting by Barbara Moens, Alice Hancock, Andy Bounds and Laura Dubois in Brussels, Sarah White in Paris, Laura Pitel in Berlin and Richard Milne in Oslo.
please do it i dare you
Why are tariffs a good thing to counter? Americans don’t pay the tariffs, Europeans do. Especially where there are no alternatives. Fund European production.
Because, the people who buy the products will have to pay more, which makes them think about the purchase.
If the tariff is smart, it will cause buyers to buy domestic, because it is now cheaper, or they will import from a different country, which in both cases causes the country that is tariffed to lose business/money.
If you tariff products that are only available from a specific county then you are just increasing the costs for your own citizens. If the tariffed products are still cheaper than the same thing produced in your own country, then you are just increasing the costs for your own citizens.
Tariffs work if you’re smart about them. Trump changes the numbers daily on a whim. They hold no substance, there’s nothing behind them.
So basically we’re on the same page. Europe has severely diminished production capabilities from decades of out sourcing. European production has to be heavily funded in tandem with protectionist measures like tariffs.
This is fine but if the EU wants to get serious it should stop enforcing US IP that tend to benefit the US techno-facists that put Trump in office, at the expense of local companies.
https://media.ccc.de/v/39c3-a-post-american-enshittification-resistant-internet
Or just sell the $8 trillion in US bonds Europe own and crater the dollar overnight.
Sell to who? How does this work? Sounds like a thing you can only do once, too. After you sold em, they’re gone, so it’s a one time thing.
Anyone that wants to buy them on the open market. Since there would be a massive drop in demand for US bond markets, the bonds being sold would drop in price. It’s tough to say how far it would fall because you don’t know how many investors would be willing to buy what percentage of that $8 trillion. Any smart investor would know that amount of a selloff would take a considerable amount of time to recover from and also put the government in a really tight position. So why buy high? There’s always going to be people with more dollars than sense, so some will buy right away but large portfolios would wait and buy after an arbitrary drop. Say 30%. That would harm the dollar and would hurt the United States’ ability to sell new bonds to borrow money.
As for the one time sale part, europe would then look to other markets to reinvest the money in the short term. They wouldn’t want to hold that amount of cash unless they wanted to fund a massive infrastructure project(interstate system, rail network, military, housing, green energy, etc.) So I would guess that they’d look to the east and buy bonds in Southeast Asia/China. Its the only other market big enough. Then if you have trillions in foreign currency, you’ll want to invest in development to keep that investment safe. New trade deals would probably be discussed and foreign investment in developing technologies would help spur innovation. Suddenly the US would look much less attractive as a trade partner and investment test bed. The US could try to pull back similar investments but we invested heavily into non liquid assets. Manufacturing being a major one during the post war boom after WWII. It’d be very difficult to pull those assets quickly. Then to wrap this all up, Europe acquired those bonds by buying them. If they wanted to slowly sell off other investments and go back to buying US bonds, they could do so. Probably on the cheap. They make their money back and more as the US market would presumably recover…if we are able to depose regressive politics after an economic collapse.
This is such a crazy situation, who knows how it’ll end up. It might spiral out of control, I can picture all copyright/patent/trademark international agreement being shredded in the next 3 years during the remaining term.
Should have done it in the first tariff discussion. We probably wouldn’t be in the position we are in now if we had stood up to him then. You don’t see him fucking with China any more do you?
Wrong approach. Make new free trade deals with other countries.
We just signed an FTA with Mercosur. That’s a major trade bloc. I think we’re doing good on that front and it demonstrates that we have the capacity to just pivot trade home away from the States.
Still, I do agree that counter-tariffs don’t feel too great as a response, even with the new FTaa in place. It might really be time to bring out the anti-coercion instrument.
I might get downvoted for that, but I think Europe should start working closer with China.
Working closer with China is fine, I don’t think many people will downvote that.
Denying China past (or present) crimes will usually get you downvoted.
Why?
Don’t forget to discuss this publicly on X and Facebook!
And in a further protest gesture, Denmark will order an additional 3B$ worth of military equipment to US companies.
The money is completely insignificant to the USA, but the equipment could be crucial to Denmark. There are still certain classes of weapons system for which there is no ready European alternative to the US version, though we are working on them.
I asked that question before, so allow me again: if the Trump decide to take Greenland, Denmark is going to resist, using their US-made equipment, and will order spare parts and ammos to whom? (oh and prepare F35 flight missions on a US server, no issue there…).
Depends on the equipment. There are many european made bombs and missiles that can fit the f-35 for example. Maybe they will use what they’ve got and rely on allies for more. The only thing I know for sure is that being more prepared is better than being less prepared.
Yeah, but they will have to pay the tariff too. So a bit more (typing is hard)
deleted by creator
