EU leaders will convene an emergency summit this week to consider how to push back against US president Donald Trump’s ambitions to take over Greenland and hit allies with fresh tariffs.
A sudden announcement by Mr Trump on Saturday, that he will impose tariffs on eight European countries from the beginning of February, rising to 25 per cent in June until a deal is reached on the purchase of Greenland, caused consternation and anger in European capitals.
The move marked a significant escalation in a diplomatic row that risks becoming a transatlantic trade war.
A senior European Commission source has confirmed that a package of counter tariffs – drawn up by the EU last year and which would hit €93 billion worth of US trade – is now on the table as a possible response.
European Council president António Costa, who chairs the EU summits, said the union was ready to defend itself against “any form of coercion”.
The French government, meanwhile, is understood to have pressed the EU to use its powerful anti-coercion instrument to target US multinationals. They view this as a possible form of leverage to encourage Mr Trump to back down on his plans to take control of Greenland.
The demands by the Trump administration to take control of Greenland for national security reasons threatens to cause the biggest rift in the transatlantic alliance since it was formed after the second World War.
In Dublin, there is strong concern that the dispute over Greenland could lead to an unravelling of a trade deal reached between the EU and the Trump administration last summer. The Government fears such a development could have serious implications for the Irish economy.
The trade agreement provided for a 15 per cent tariff rate ceiling on European exports to the US, including pharmaceuticals and semiconductors. However, the accord has not yet been ratified by the European Parliament and there are fears it could collapse entirely in the backlash against Mr Trump’s announcement of new tariffs over Greenland.
Department of Finance briefing documents for Tánaiste Simon Harris, which were published on Friday afternoon – about 24 hours before Mr Trump’s comments – described the US/EU trade deal as being “of critical importance ” for the Irish economy.
The documents said the trade deal represented “a better outcome for households and firms than the alternative landscape that would have almost certainly included higher tariffs, scope for retaliation and escalation and, ultimately, a higher degree of uncertainty”.
The Department of Finance said the deal “provides an important shield to Irish exporters that could have been subject to much larger tariffs”.
Senior MEPs from different political groups have indicated a European Parliament vote to ratify the EU-US tariff deal would no longer have sufficient support to pass.
Taoiseach Micheál Martin on Sunday criticised Mr Trump’s tariff threats as “extraordinary” and “unacceptable”. However, he said it would be “premature” for the EU to use its powerful and unprecedented anti-coercion instrument against the US.
Mr Martin told RTÉ Radio 1’s This Week programme: “We have an agreement, we’ve arrived at it. We should faithfully honour that [trade] agreement. If others then want to undermine that agreement months after it was arrived at, then Europe is entitled to respond. But for now, I would honour the agreement that we’ve entered into.”
Mr Harris is to discuss the threat of new US tariffs at a meeting of EU finance ministers in Brussels on Monday.
Mr Trump, meanwhile, faced criticism from some within his own Republican Party over his moves to control Greenland. They say his actions could hurt the US economically and strain the Nato military alliance.
Senators Thom Tillis and Lisa Murkowski were part of a bipartisan group that travelled to Denmark to discuss concerns in Greenland, which is an autonomous Danish territory.
Both Mr Tillis and Ms Murkowski sharply criticised new tariffs threatened on Saturday by the US president Trump on a slew of European countries.