EU Prepares €93B Tariff Strike as Greenland Dispute Roils US Trade
A February 7 deadline approaches for massive retaliatory duties on US goods as Washington links new levies to the strategic purchase of Greenland.
A fragile truce in transatlantic trade is set to shatter as the European Union prepares to unleash a potential €93 billion tariff package against the United States, with a deadline for action looming on February 7. The move marks a dramatic escalation in a dispute centered on Washington's unprecedented demand to purchase Greenland, threatening a new and severe tariff fight between the Western world's largest economies.
The conflict stems from a US plan to impose a 10% tariff on goods from eight northern European nations, including Germany, France, and Denmark, starting February 1. The White House has explicitly stated the levies will escalate to 25% on June 1 unless a deal is reached for the US to acquire Greenland, a semi-autonomous Danish territory. This unconventional blend of territorial ambition and trade policy has been met with shock and condemnation in European capitals.
Speaking at the World Economic Forum in Davos, US Treasury Secretary Scott Bessent advised European leaders against an immediate counter-attack, characterizing the tariff threat as a strategic negotiating tactic. "I would encourage our European friends to take a deep breath and let things play out," Bessent stated, insisting that US-Europe relations have "never been closer". He affirmed the US intends to press ahead with a separate, broader trade deal with the EU, a sentiment that seems increasingly disconnected from the mood in Brussels.
European officials have reacted with a mix of defiance and alarm. In a joint statement, leaders warned the US measures "undermine transatlantic relations and risk a dangerous downward spiral." The European Commission is now weighing its options, which include reactivating a dormant retaliation list targeting roughly €93 billion ($108 billion) in American products. The legal authority to suspend these tariffs expires on February 6, setting the stage for their automatic revival.
Adding to the tensions, the European Parliament has responded by freezing the ratification process for a previously agreed EU-US tariff deal, signaling that business-as-usual is off the table. French President Emmanuel Macron has reportedly suggested deploying the EU's new "anti-coercion instrument," a powerful defensive tool sometimes referred to as a "trade bazooka", designed to counter economic intimidation.
The standoff injects a significant dose of geopolitical risk into a global economy already grappling with uncertainty. A full-blown tariff war would disrupt intricate supply chains, potentially reignite inflationary pressures, and weigh on investor sentiment. The specific US goods that would be targeted by the EU's multi-billion dollar response have not been finalized, but they would likely be selected to maximize political pressure on key sectors across the United States.
With the February deadline fast approaching, diplomatic channels are under intense pressure to find an off-ramp. However, the unorthodox nature of the US demands has left negotiators with little common ground. For global markets, the dispute serves as a stark reminder that trade tensions can erupt from unpredictable geopolitical flashpoints, posing a significant threat to economic stability.