Trump Backs off European Tariff Threat over Greenland

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land Texas)

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Summary

In a back-and-forth dialogue at venues ranging from the World Economic Forum to Truth Social, U.S. President Donald Trump has stepped down from his threat of using military force to obtain Greenland for the U.S. and has called off pending retaliatory tariffs on eight European nations.

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Changing Rhetoric

One post on social media from the U.S. president is all it takes to swing markets, revise headlines and alter pending trade policies. After roiling markets on both sides of the Atlantic over the weekend with the announcement that he would implement a 10% tariff on eight European countries--rising to 25% in June--should they fail to support his ambitions for a U.S. takeover of Greenland, U.S. President Donald Trump has now cleared the slate again with another Truth Social post from Wednesday afternoon calling off those tariffs.

"Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," Trump posted. "This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."

The post came hours after an hour-long speech at the World Economic Forum in Davos, Switzerland, in which Trump suggested he wouldn't use military force to take over the Arctic island.

"I don't want to use force. I won't use force. All the U.S. is asking for is a place called Greenland," Trump said. "You can say 'yes,' and we will be very appreciative. Or you can say 'no,' and we will remember."

The EU's 'Trade Bazooka'

For much of Wednesday, Trump's remarks at Davos had left open the possibility of the near-term 10% tariffs, rising to 25%, on Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands and Finland, prompting European leaders to consider use of the European Union's (EU) Anti-Coercion Instrument (ACI), referred to as the bloc's "trade bazooka."

Proposed in 2021 and written into EU law in 2023, primarily as a response to potential coercive economic pressure from China, the ACI has never been employed before, but certain key EU leaders were calling on its implementation against the U.S. before Trump seemed to back away on the tariffs.

Mario Monti, a former Italian prime minister, and Sylvie Goulard, a former member of the European Parliament, wrote in Politico that, in addition to tariffs, ACI countermeasures could include "restrictions on trade in services and certain aspects of intellectual property rights, or restrictions on foreign direct investment and public procurement." The ACI could restrict U.S. companies' access to European markets, barring them from public tenders. In other words, sanctions--which could cost U.S. companies billions of dollars in lost revenue, in addition to whatever retaliatory tariffs might be approved.

Pending Trade Deal

Since July, the EU has been negotiating what is considered a somewhat lopsided deal that favors the U.S. in order to shield bloc members from even worse threats. According to the Washington Post, the pending trade deal "would have eliminated European tariffs on all U.S. industrial goods while leaving products from Europe facing a 15% tariff." The Post added that the EU is the U.S.' largest trading partner, with two-way trade of about $1 trillion each year.

Whether a vote on that deal will move forward after the apparent removal of the tariff threat remains to be seen, but European Parliament members will be considering multiple scenarios in regard to how the EU moves forward in regard to the U.S. and its Greenland ambitions.

Moving Forward

Exactly what sort of "framework" Trump said he has worked out with the NATO secretary general remains cloudy. But one thing is certain: Trump's vision of the U.S.' role as the guiding force of NATO is being called into question by many European leaders and their constituents, and the U.S. president's stance that this new framework "will be a great one for the United States of America, and all NATO Nations," could also be called into question.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).