{"id":423179,"date":"2026-01-22T16:07:10","date_gmt":"2026-01-22T16:07:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/423179\/"},"modified":"2026-01-22T16:07:10","modified_gmt":"2026-01-22T16:07:10","slug":"trumps-taco-on-greenland-could-stave-off-an-economic-war","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/423179\/","title":{"rendered":"Trump\u2019s TACO on Greenland could stave off an economic war"},"content":{"rendered":"

London
\n \u00a0\u2014\u00a0<\/p>\n

\n President Donald Trump\u2019s threat to tariff countries opposed to his effort to annex Greenland is gone, and, with it, the prospect of tit-for-tat economic warfare with Europe, one of America\u2019s most important trading partners.\n <\/p>\n

\n Trump on Wednesday announced a framework for a future deal on Greenland and called off his promised tariffs \u2013 his latest TACO (the Wall Street acronym for \u201cTrump Always Chickens out\u201d).\n <\/p>\n

\n Europe was considering emergency action against the United States, because Trump\u2019s demand that Europe give the US the sovereign territory of a NATO ally or face punishing tariffs was a line the region\u2019s leaders were not prepared to let him cross \u2014 at least not without a fight. European Union leaders still plan to hold a previously scheduled emergency meeting in Brussels Thursday.\n <\/p>\n

\n It\u2019s not clear if the EU\u2019s threats to retaliate with its own trade measures or its decision Wednesday to pause final approvals on its trade deal with the US motivated Trump to back down.\n <\/p>\n

\n Whatever Trump\u2019s TACO rationale, though, a nasty war appears to have been averted \u2013 for now.\n <\/p>\n

\n On Wednesday, EU lawmakers responded to Trump\u2019s tariff threat by agreeing to suspend<\/a> ratification of a draft EU-US trade deal forged last summer through blood, sweat and (mostly) European tears.\n <\/p>\n

\"A<\/p>\n

\n The deal set a 15% levy on most imported goods from the bloc \u2013 with several notable carveouts, including pharmaceuticals \u2013 and includes an EU commitment to buy $750 billion worth of US energy products.\n <\/p>\n

\n The trade deal\u2019s prospects remain unclear. Julian Hinz, head of trade policy research at the Kiel Institute, thinks many in Europe don\u2019t believe the deal is worth protecting. He told CNN that many Europeans view it as \u201cvery asymmetric\u201d in favor of the US.\n <\/p>\n

\n In retaliation against the United States, the EU could have dusted off a package of retaliatory tariffs worth \u20ac93 billion ($109 billion) drawn up last year in response to previous Trump tariff threats. It reportedly targets products ranging from American soybeans to whiskey.\n <\/p>\n

\"Soybean<\/p>\n

\n The tariffs could have dealt a political blow to Trump as he faces midterm elections later this year, said Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics.\n <\/p>\n

\n \u201cThat package was already designed to target Republican states, agricultural states\u2026 it would have, I think, a fairly significant negative impact on (these places).\u201d\n <\/p>\n

\n The EU could have gone further than retaliatory levies and activated its so-called \u201ctrade bazooka\u201d for the first time, a mechanism allowing the bloc\u2019s executive to impose a range of penalties on trading partners.\n <\/p>\n

\n The so-called Anti-Coercion Instrument<\/a> allows the EU to slap controls on European exports to the US, introduce new tariffs and limit American companies\u2019 investments in the bloc, said Carsten Brzeski, global head of macro research at ING.\n <\/p>\n

\n \u201cThe beauty (of the ACI) is that everything could be in it and nothing,\u201d he said.\n <\/p>\n

\"A<\/p>\n

\n That allows it to inflict significant damage on the United States, noted Kirkegaard \u2013 as long as enough member states agree.\n <\/p>\n

\n \u201cThis tool is legitimately described as a bazooka\u2026 but you can also regard it maybe as a scalpel that really can hurt US business interests in a very surgical way.\u201d\n <\/p>\n

\n In brandishing the ACI, Europe may have taken inspiration from China\u2019s forceful retaliation against the United States in its own trade war last year.\n <\/p>\n

\n The world\u2019s second-largest economy \u2013 which, at one point, had a 145% overall US tariff on its goods \u2013 introduced export controls for critical minerals. It also ramped up exports<\/a> to new and existing markets with great success, showing that it could not only withstand US tariffs, but thrive<\/a>.\n <\/p>\n

\n EU countries collectively own $8 trillion worth of US stocks and bonds, making it America\u2019s largest lender, George Saravelos, Deutsche Bank\u2019s head of foreign exchange research, wrote in a note on Sunday. He suggested that Europe could unload US government debt in retaliation for Trump\u2019s grab for Greenland, a move that could raise borrowing costs in the US and push up the cost of living.\n <\/p>\n

\n US Treasury Secretary Scott Bessent dismissed the note at the World Economic Forum in Davos, Switzerland, on Wednesday, saying Deutsche Bank\u2019s CEO told him the bank doesn\u2019t stand by that analysis.\n <\/p>\n

\n Dumping US debt is almost certainly fanciful because it would backfire, reducing the value of the countries\u2019 remaining Treasury holdings.\n <\/p>\n

\n \u201cI therefore don\u2019t regard this as a really live trade weapon,\u201d said Kirkegaard. \u201cIt is the kind of thing you do (if there is) actually a war in Greenland.\u201d\n <\/p>\n

\n A trade dispute would have cost the United States \u2013 and Europe. Trump threatened 30% tariffs on the bloc ahead of the deal.\n <\/p>\n

\n That could have raised prices in the United States and further eroded business confidence and pushed a teetering US jobs market over the edge. And it could have hurt European businesses by turning American customers off their products.\n <\/p>\n

\n Retaliation could have been a dangerous proposition, some argue, because it may have lead Trump to abandon other policies that are crucial to Europe.\n <\/p>\n

\n \u201cIf Europe starts to impose tariffs, who stops the US government from saying \u2018oh well then we\u2019ll stop supporting Ukraine\u2019?\u201d said Brzeski. \u201cEurope still thinks we are in a game with very clear rules – we\u2019re not.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"London \u00a0\u2014\u00a0 President Donald Trump\u2019s threat to tariff countries opposed to his effort to annex Greenland is gone,…\n","protected":false},"author":2,"featured_media":423180,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":{"0":"post-423179","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/423179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=423179"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/423179\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/423180"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=423179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=423179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=423179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}