EU's Strategic Options to Counter US Threats Over Greenland

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 per cent 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 per cent on June 1 if no deal was in place for “the Complete and Total purchase of Greenland” by the United States, he wrote on social media. Trump to impose new 10% tariff on European countries opposed to Greenland plan 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 signalled 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 in 2024, or an average of €4.6-billion a day, according to EU statistics agency Eurostat. What next for the EU? Trump, European Commission President Ursula von der Leyen, and other world leaders will are now travelling 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 on 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.” Opinion: Mad King Trump would break the world to gain Greenland The leaders expressed “readiness to defend ourselves against any form of coercion.” U.S. Treasury Secretary Scott Bessent, speaking Monday to reporters in Davos, Switzerland, suggested that EU officials had been reaching out to the administration in the wake of Trump’s threat, saying “evidently there are a lot of inbounds.” Asked about the prospect of retaliatory measures by the European bloc, Bessent said: “I think it would be very unwise.” What are options on the table? Europe has a lot of tools at its disposal but a fraught path ahead, said 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 said. The EU has three major economic tools it could use to pressure Washington: new tariffs, suspension of the U.S.-EU trade deal, and a “trade bazooka,” the unofficial term for the bloc’s Anti-Coercion Instrument that could sanction individuals or institutions found to be putting undue pressure on the EU. The EU and the U.S. agreed in June on a framework for a trade deal. It was due to be ratified by the European Parliament this week, but on Saturday, the leader of the largest group in the Parliament, centre-right German lawmaker Manfred Weber, said approval was “not possible at this stage.” Greenland has become epicentre of growing rift between Europe and U.S. The EU could also levy tariffs on U.S. goods worth €93-billion that it suspended after the July deal. However, commission spokesperson Gill said that unless that suspension is extended, those levies would take effect on Feb. 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 that hard-won deal. “This is a time for cool heads,” he said before a meeting of the EU’s finance ministers in Brussels. “We worked very hard at an EU level to have a trade agreement in place with the United States of America, a trade agreement that will ensure economic activity can continue to flow across the Atlantic, a trade agreement that is good for the United States, good for Europe, good for Ireland. Anything that now moves away from that, or deviates from that could have potentially very, very significant consequences.” Europe’s biggest exports to the U.S. are pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. The value of EU-U.S. trade in goods and services amounted to €1.7-trillion in 2024, or an average of €4.6-billion a day, according to EU statistics agency Eurostat. In 2021, the European Commission set up the Anti-Coercion Instrument after Beijing restricted trade to Lithuania, which has built ties with Taiwan, claimed by China as its territory. “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. Analysis: Trump’s preoccupation with Greenland reflects how his presidency is reshaping the world order There’s widespread refusal to use the instrument in European capitals out of fears it would escalate matters – but France and Germany, the bloc’s two economic juggernauts, have signalled 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 co-ordinated manner should they be confirmed. We will ensure that European sovereignty is upheld.” Indirectly, the EU has sought to shift its economies from the U.S. to other parts of the world. Brussels signed a massive trade deal last week with the five Mercosur nations in South America as well as separate agreements with Indonesia and Japan. EU officials are working on similar free trade deals with the United Arab Emirates and India, where von der Leyen is expected in late January to finalize negotiations. Gill, the commission spokesperson, said the India deal would cover nearly 2 billion people, and together with the Mercosur deal it provides a clear victory for the EU in the wake of the global economic chaos unleashed by the second Trump administration. “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 said.