EU Grapples with Trump's Tariff Threats Over Greenland Dispute

The European Union faces mounting challenges amid President Donald Trump's announcement of tariffs targeting several European countries, including Sweden, in relation to his plans to acquire Greenland. The tariffs, set to begin on February 1 at a 10% rate and potentially rising to 25% by June, are a direct response to opposition from these nations and their military support to Greenland.

Experts emphasize the gravity of this unprecedented move, with Per Altenberg, chief economist at Kommerskollegium, noting that although tariffs target individual countries, the EU is expected to respond with strong solidarity at the collective level. Altenberg criticized the tariffs as inconsistent with World Trade Organization rules and a clear example of the U.S. using tariffs as a foreign policy weapon.

Senior economist Robert Bergqvist of SEB highlighted the heightened stakes, observing that Trump's escalation from economic disputes to territorial issues introduces new complexities. Nonetheless, Bergqvist remains cautiously optimistic, stressing that negotiations between the U.S. and Europe could still avert a full-blown trade war.

Strategically, the European Union is weighing its options between engaging in diplomatic negotiations to delay tariff implementations or adopting a more assertive stance through retaliatory tariffs on American goods. An op-ed suggests the EU could leverage its position as a substantial holder of U.S. debt—about 20% of the projected $39 trillion national debt—to threaten selling U.S. debt securities, potentially increasing U.S. financing costs. Such a tactic would mark a significant departure from the EU’s historically more passive responses.

In parallel, U.S. Senate Democrats, led by Chuck Schumer, intend to propose legislation aimed at blocking the tariffs, citing potential harm to the American economy and its European allies. This bipartisan effort underscores internal U.S. opposition to the tariff measures initiated by the Trump administration.

The situation remains fluid as the EU navigates responses to what some call an aggressive use of trade policy intertwined with geopolitical aims. With tariffs scheduled to begin imminently, both sides appear motivated to seek solutions, though the potential for escalation lingers.