A fragile EU–U.S. trade deal is under strain following U.S. President Donald Trump’s tariff threats over Greenland. European leaders are now forced to weigh up not only their immediate response but also what a deeper trade confrontation could entail.
Tensions intensified after the European Parliament (EP) signalled it was preparing to suspend approval of the deal. On Wednesday (21 January) the Parliament, the European Union's legislative body, suspended work on the deal:
"Given the continued and escalating threats, including tariff threats, against Greenland and Denmark, and their European allies, we have been left with no alternative but to suspend work" on the agreement, said Bernd Lange, the chairman of the EP's Committee on International Trade.
What was agreed?
Trump and European Commission President Ursula von der Leyen reached the agreement setting new terms for EU–U.S. trade on 27 July 2025, describing it as the first step towards a broader, long-term framework.
The deal was intended to restore stability and predictability for businesses, secure EU access to the U.S. market, protect integrated value chains and jobs, and deepen cooperation on economic security and supply chains.
Both sides agreed to coordinate on steel, aluminium and copper overcapacity, reduce tariffs through quotas, and lower non-tariff barriers. A U.S. tariff ceiling of 15 percent was agreed for "most EU exports."
Trump tariff threat
However, the deal was tested within months, with Trump linking trade relations to a broader geopolitical dispute over Greenland.
Trump has warned the trade truce could unravel, saying the U.S. could impose escalating tariffs unless it is allowed to buy Greenland, home to about 57,000 people.
He said the measures could take effect from 1 February, naming EU members Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as the UK and Norway.
Trump initially declined to say whether he would use force to seize Greenland, but dismissed the presence of NATO allies on the island, saying “that wasn’t a military” and that “they sent a few people… to guard against Russia.”
European leaders rejected his position. Denmark’s Foreign Minister Lars Løkke Rasmussen said: “We are living in 2026. You can trade with people, but you don’t trade people.”
Greenland’s Prime Minister Jens-Frederik Nielsen said the territory must decide its own future, adding: “We will not let ourselves be pressured. We stand firm on dialogue, on respect and on international law.”
EU leaders are due to discuss next steps on Greenland at an emergency summit in Brussels on Thursday (22 January). Any decision will require consensus among the bloc’s 27 member states — a process that can be politically slow and complex.
One option remains a package of tariffs on €93 billion ($109 billion) worth of U.S. imports, announced last year in response to Trump’s 'Liberation Day' tariffs, but put on hold during negotiations.
That reprieve expires on 6 February 2026, meaning EU levies could take effect the following day unless extended or replaced by approval of the deal.
Another option, being pushed by French President, Emmanuel Macron, is the Anti-Coercion Instrument (ACI). It has never been used and could restrict access to public tenders, investments or banking activity, or limit trade in services — an area where the U.S. runs a surplus with the EU, including in digital services. The instrument is designed to respond to economic pressure only as a last resort.
Macron has urged the EU to consider its retaliatory tools, saying Washington’s “endless accumulation” of tariffs was “fundamentally unacceptable,” especially when used as leverage against territorial sovereignty.
If tensions escalate further, the EU has a defined, but tightly constrained, set of tools under the ACI. It allows restrictions on imports and exports of goods and services, as well as measures affecting intellectual property rights and foreign direct investment. It could also limit access to the EU market - including public procurement - tighten chemical and sanitary rules, or restrict access to EU funding.
In theory, retaliation could target politically-sensitive pressure points. These range from U.S. products closely associated with Republican states, such as Kentucky bourbon, to sectors aligned with Trump’s support base, including crypto and Silicon Valley.
Other potential levers include areas the U.S. relies on abroad. For example, insulin imports from Denmark, or European-made weight-loss drugs like Ozempic and Wegovy, though EU officials have cautioned that such measures would be highly sensitive and politically difficult.
Speaking at the World Economic Forum in Davos, European Commission President Ursula von der Leyen framed the moment as part of a broader shift in global trade, warning that “geopolitical shocks can and must serve as an opportunity for Europe” and calling it “a necessity to build a new form of European independence.”
She said Europe was choosing “fair trade over tariffs, partnership over isolation,” while remaining committed to “de-risking our economies and diversifying our supply chains.”
Despite the range of options, EU diplomats say political appetite for aggressive retaliation remains limited, with most member states wary of triggering a full-scale trade war and preferring targeted, proportionate and temporary measures, particularly given the need for consensus among the bloc’s 27 members.
Georgia’s busiest sea gateway has reached its capacity limit, adding urgency to plans for a major expansion of Poti port as the country seeks...
Overnight Iranian strikes on an air base in Jordan damaged multiple U.S. aircraft and left one without a wing, American media reported. Meanwhile, ...
Saudi Arabia’s outbound travel market could surge from around $35 billion to more than $60 billion by 2030-2034, driven by a young generation...
Four people were killed, including a child, in Ukrainian strikes on the Russian port city of Novorossiysk overnight, according to the governor of the Krasnodar region. Ukraine's drone forces commander, Robert Brovdi, said Russian military ships were destroyed in the attacks.
Wildfires have broken out in Türkiye’s Antalya province, forcing hundreds of people to evacuate as strong winds fuelled the flames.
A TV channel was struck during a live broadcast on Tuesday, Ukrainian President Volodymyr Zelenskyy said, as Russian strikes on Kyiv killed at least three people, the city's Mayor Vitali Klitschko said. Meanwhile, drones hit civilian infrastructure in Russia's southwestern Saratov region.
U.S. Central Command (CENTCOM) said its forces destroyed five Iranian crude oil carriers after the Islamic Revolutionary Guard Corps (IRGC) allegedly launched two ballistic missile attacks against a U.S. Navy warship over the past two days.
Overnight Iranian strikes on an air base in Jordan damaged multiple U.S. aircraft and left one without a wing, American media reported. Meanwhile, explosions were heard across parts of southern Iran according to local media reports.
Ukrainian forces struck a Russian oil refinery in Siberia and a seaport in Dagestan in the past 24 hours, President Volodymyr Zelenskyy said. He will meet Canadian Prime Minister Mark Carney on Thursday to discuss air defences for Ukraine over winter.
Eight Muslim-majority countries have launched a joint push for wider international action against trade linked to Israeli settlements, seeking to build momentum from new measures announced by the UK and other Western governments.
Saudi Arabia is facing a problem that goes beyond the latest Houthi attacks on its southern oil facilities. The kingdom is now dealing with pressure on energy exports at the Strait of Hormuz to the east and the Red Sea route to the west.
Two Azerbaijani sailors were killed on Wednesday when a foreign cargo ship they were travelling on was attacked by drones in the Black Sea, Baku's Foreign Ministry has said.
Iceland’s government plans to introduce legislation in February to permanently ban commercial whaling, potentially leaving Norway and Japan as the world’s only countries still allowing the practice.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment