Trump himself has told us what\u2019s going on: he\u2019s throwing a temper tantrum over not receiving a Nobel Peace Prize \u2014 not how he put it, but that was the gist of his text to Norway\u2019s prime minister<\/a>. And there\u2019s no reason to disbelieve him, even though Scott Bessent says that quoting Trump\u2019s own words is a \u201ccomplete canard<\/a>.\u201d<\/p>\n True, beating the drum about Greenland serves multiple other purposes: deflecting attention from Renee Good\u2019s murder, the Epstein files, and his sagging poll ratings; humiliating the Europeans, who he hates for their decency and strong democracies; and getting another testosterone rush from flexing American military muscle. But it\u2019s mostly just a tantrum.<\/p>\n However, we can say something about the likely effects of his attempt to coerce Europe with tariffs \u2014 namely, that it won\u2019t work. Only in Trump\u2019s fantasies does American possess huge economic leverage over Europe. To the extent that we have any leverage over them, it\u2019s matched by the leverage they have over us.<\/p>\n Allow me to explain. The starting point for any discussion of Trump\u2019s tariff threats should be the observation that tariffs are a tax on U.S. consumers and businesses<\/a>, not foreigners.<\/p>\n That\u2019s what economists believed before Trump started his tariff spree; the results of his tariffs show that they were right. Foreign producers have not, contrary to Trump\u2019s predictions, absorbed the tariffs by significantly cutting the prices they were charging U.S. customers.<\/p>\n This is clear when one looks at data on average import prices. For example, in 2025 the average tariff<\/a> on goods imported from China went from 11 percent to 37 percent, but the average price the U.S. was paying for those goods fell only slightly<\/a>, less than 3 percent.<\/p>\n And a new study<\/a> from the Kiel Institute for World Economics offers a more precise estimate based on detailed trade data: in 2025, foreigners absorbed only 4 percent of the cost of Trump\u2019s tariffs. This means that Americans are paying 96 percent of the cost of the tariffs.<\/p>\n So Trump\u2019s imposition of tariffs on European nations that have sent troops to Greenland is basically a declaration that he will punish American consumers and businesses until Europe gives him what he wants.<\/p>\n But won\u2019t Europe be hurt by loss of U.S. export markets? Maybe, but not by much. The European economy is huge \u2014 almost as big, in dollar terms, as the U.S. economy \u2014 and doesn\u2019t depend crucially on the U.S. market. It\u2019s worth noting that very high US tariffs on China haven\u2019t appeared to slow China\u2019s economic growth<\/a> at all.<\/p>\n Furthermore, if America and Europe get into a trade war, U.S. companies will be hit as hard as European companies. That\u2019s because America sells almost as much to Europe as Europe sells to America:<\/p>\n Source: Bureau of Economic Analysis<\/p>\n More precisely, U.S. producers sell about 8 dollars\u2019 worth of goods and services to Europe for every 9 dollars\u2019 worth of European sales to America. And even that small asymmetry is largely a statistical illusion caused by leprechaun economics<\/a>: Irish subsidiaries of U.S. companies, especially pharmaceutical producers, charge their parent companies inflated prices so as to shift reported profits to Ireland, which has a lower corporate tax rate.<\/p>\n Now, you may be tempted to dismiss concerns about European retaliation, claiming that European leaders are weak and timid. That\u2019s surely what Trump thinks, and it has been true in the past. But is it still true? The reason Trump is imposing tariffs on eight European countries is that they dared to send troops to Greenland to forestall a possible U.S. invasion \u2014 a pretty gutsy move.<\/p>\n Or look at the way Europe has completely replaced the United States in supporting Ukraine:<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/40422455-f41d-421a-b98e-2f436b30364a_1190.png\" "\\"A")
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