{"id":428595,"date":"2026-01-21T22:09:12","date_gmt":"2026-01-21T22:09:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/428595\/"},"modified":"2026-01-21T22:09:12","modified_gmt":"2026-01-21T22:09:12","slug":"as-trumps-threats-over-greenland-escalate-will-europe-use-its-trade-bazooka","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/428595\/","title":{"rendered":"As Trump\u2019s threats over Greenland escalate, will Europe use its \u2018trade bazooka\u2019?"},"content":{"rendered":"

The renewed campaign by United States President Donald Trump to acquire Greenland has escalated, with tariff threats against European allies. Asked on Tuesday how far he is willing to go to \u201cacquire\u201d Greenland, Trump replied<\/a>: \u201cYou\u2019ll find out\u201d.<\/p>\n

This is the latest episode in a long-running effort under Trump 2.0 to remake the international order<\/a> with major geopolitical implications: <\/p>\n

the potential rupture of NATO
\nfurther pressure on transatlantic trade
\na shock to stock and bond markets. <\/p>\n

There is a chance of both escalation and de-escalation when Trump holds meetings<\/a> this week on Greenland with European leaders at the World Economic Forum in Davos, Switzerland.<\/p>\n

US\u2013Greenland relations and the ownership question<\/p>\n

Trump first floated the idea of acquiring Greenland during his first presidency, which at the time was dismissed as \u201cabsurd<\/a>\u201d and a diplomatic curiosity. <\/p>\n

Greenland, while part of the Danish realm<\/a>, is a self-governing territory with its own parliament and a right to self-determination under international law. Under a 1951 agreement<\/a>, the US already has extensive rights to install and operate military bases in Greenland.
Trump\u2019s arguments around Greenland have shifted from access to resources<\/a> to defence arguments<\/a>. <\/p>\n

Trump has now explicitly linked the acquisition of Greenland to trade sanctions against eight \u2013 ostensibly allied \u2013 European countries unless they cooperate in facilitating a deal. He is using trade as a weapon. <\/p>\n

\"A<\/a><\/p>\n

A protester at a rally against the World Economic Forum being held in Davos, ahead of President Trump\u2019s visit.
\n Michael Buholzer\/EPA<\/p>\n

Tariffs as foreign policy coercion<\/p>\n

Trump announced tariffs<\/a> of 10% on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland beginning February 1, rising to 25% by June 1, until the \u201cComplete and Total purchase of Greenland\u201d has been achieved. <\/p>\n

These tariffs are in addition to the so-called Liberation Day tariffs announced in April 2025. The legality of these tariffs under US law is currently under scrutiny by the US Supreme Court<\/a>. The outcome is important: if Trump loses, he would not be able to impose tariffs over Greenland without Congressional involvement. <\/p>\n

This is not regular trade policy. Tariffs are traditionally imposed as remedies against trade measures by other governments. Here, they are being used outside any international legal constraints as leverage to extract unrelated territorial concessions from allies. While national security exceptions exist<\/a>, its use against close allies \u2013 and in pursuit of territorial objectives \u2013 pushes that exception well beyond its limits. <\/p>\n

What is the EU\u2019s trade \u2018bazooka\u2019?<\/p>\n

European leaders are forced to choose between multiple unattractive options.
\nThey strongly rejected<\/a> this latest round of US coercion, emphasising Greenland\u2019s sovereignty and self-determination. <\/p>\n

French President Emmanuel Macron, speaking in Davos, said<\/a> the \u201cendless accumulation of new tariffs [\u2026] are fundamentally unacceptable, even more so when they are used as leverage against territorial sovereignty\u201d. <\/p>\n

\u201cWe do prefer respect to bullies. And we do prefer rule of law to brutality,\u201d Macron said. German Chancellor Friedrich Merz was more conciliatory<\/a>.<\/p>\n

\"President<\/p>\n

French President Emmanuel Macron in Davos spoke out against bullying nations.
\n Gian Ehrenzeller\/EPA<\/p>\n

European leaders warned of a \u201cdangerous downward spiral<\/a>\u201d in transatlantic ties and possible retaliatory measures. Such counter tariffs had already been drafted up in response to Trump\u2019s 2025 tariff threats, up to a value of \u20ac93 billion<\/a> (A$162 billion). <\/p>\n

While such tit-for-tat trade measures are already concerning, the EU has another measure at its disposal: its Anti-Coercion Instrument<\/a> or ACI, sometimes referred to as its \u201ctrade bazooka\u201d. This was initially designed to deter economic coercion by China. <\/p>\n

Macron has raised<\/a> the spectre of using the Anti-Coercion Instrument against the US. This would allow the EU to select from a range of measures, including:<\/p>\n

the imposition of tariffs on US goods
\nrestrictions on imports and exports of good and services such as banking or insurance
\ninvestment screening, such as preventing US investors from buying companies in the defence or energy sectors
\nrestrictions on intellectual property rights, which would put pressure on US tech giants.<\/p>\n

The decision over whether to impose such measures has to be taken by EU member governments in the Council of the European Union. <\/p>\n

In addition to the time it takes to reach such a decision (officials indicated it could take up to six months<\/a>), it would also test the ability of EU leaders to resist opposition from within. Hungary\u2019s Victor Orban, a close Trump ally, could try to play the role of spoiler. Although even for him, Trump\u2019s power play over Greenland may be a step too far into unknown waters. <\/p>\n

In financial markets, Europeans are also large holders<\/a> of US government bonds. One Danish pension fund on Tuesday announced plans<\/a> to sell off its holdings of US Treasuries worth US$100 million (A$148 million). Any broader sell-downs could put pressure on the US bond market.<\/p>\n

For the time being, European leaders appear to want to keep the EU trade bazooka dry, indicating a path of de-escalation<\/a> bordering on appeasement rather than outright confrontation despite Trump\u2019s tactics. <\/p>\n

If the EU retaliates, it is likely Trump will respond in kind, possibly resulting in a ratcheting up of trade measures on both sides of the Atlantic. This would have devastating consequences for consumers and exporters alike. <\/p>\n

NATO\u2019s greatest test<\/p>\n

Trump\u2019s antagonism is not just an odd foreign policy episode, but a test<\/a> of the strength and depth of the NATO alliance, international legal norms, and trade governance. <\/p>\n

The outcome of this conflict \u2013 which is entirely of Trump\u2019s making \u2013 will signal whether the post-Cold War order can withstand transactional geopolitics cloaked as national security. <\/p>\n

Trump has had multiple off-ramps, none of which he appears to be willing to take. His actions will determine whether the US can retain its status as a reliable superpower or will be seen as a pariah in international relations.<\/p>\n","protected":false},"excerpt":{"rendered":"The renewed campaign by United States President Donald Trump to acquire Greenland has escalated, with tariff threats against…\n","protected":false},"author":2,"featured_media":428596,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-428595","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/428595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=428595"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/428595\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/428596"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=428595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=428595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=428595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}