As divisions over Greenland grow, Europe examines its options
Donald Trump’s tariff threats force Europeans to count their arrows
IT WAS hardly the first time since Donald Trump’s inauguration last year that Europeans have been outraged by America. But the anger at the weekend, after America’s president threatened to impose a 10% tariff rate on eight European countries that had dared to send a few troops to Greenland, felt more determined than before. “No intimidation nor threat will influence us,” thundered Emmanuel Macron, the French president, “neither in Ukraine, nor in Greenland, nor anywhere else”. From Ulf Kristersson, the Swedish prime minister, to Ursula von der Leyen, president of the European Commission, politicians were indignant at America’s latest bullying. The prospect of a nominal ally using economic pressure to seize another NATO member’s sovereign territory left European leaders frantically seeking a coherent response. They might meet as early as January 19th for an emergency summit.
Europe has options, but they are limited and will be difficult to co-ordinate. The 27 members of the European Union, plus Britain, Norway, Iceland and war-torn Ukraine, need a plan they can all live with. The initial question was whether to respond at all. Giorgia Meloni, Italy’s populist-right prime minister, called Mr Trump after his tariff threat and reported that he had struggled to interpret Europe’s actions. She seemed to suggest that Mr Trump had been misled by the tiny, symbolic troop deployment to Greenland. This had been carried out at Denmark’s request and was presented as an effort to honour his requests for a stronger European military presence in the Arctic, whereas Mr Trump appeared to see it as a move to protect the island from America.
The Italian leader termed the tariffs “a mistake”. Europeans have long hoped that diplomacy could bring an end to the misunderstandings that have developed between themselves and America. Mr Trump has, after all, blustered about Greenland in the past before letting it drop. But it seems doubtful that Ms Meloni herself believes this latest crisis will merely pass.
For European leaders who want to send a warning to America, the simplest response is trade retaliation. European parliamentarians have already declared they will put a hold on the so-called Turnberry Agreement, a trade deal the EU signed with America last summer under which Europe accepted a 15% tariff rate without retaliating. Should Mr Trump make good on his threat, the rate on exports to America from the eight countries that deployed to Greenland would rise to at least 25%. The EU might then enact a list of retaliatory tariffs on about €93bn-worth ($108bn) of goods from America that it had prepared in response to American tariff hikes last spring.
Europeans who felt Turnberry was a humiliation would cheer its demise. Yet the EU will hesitate on trade retaliation because of a desire to keep America on side when it comes to Ukraine. Mr Trump has halted all military and financial aid to Ukraine, and Europe has taken over supplying the country with money and most of its arms. But America still sells many of the arms for which Europe pays, and remains critical in particular for Patriot air-defence missiles and intelligence.
Should the EU decide that American threats over Greenland outweigh the risk to Ukraine, it could deploy its most powerful economic weapon: the anti-coercion instrument (ACI). Usually the bloc only responds to others’ economic misbehaviour, matching their tariffs or subsidies with ones of its own. The ACI, by contrast, allows the EU to respond to coercive behaviour with almost any response, regardless of the type of provocation. France and some MEPs are calling for the ACI to be invoked.
Yet hesitant member states fear that once triggered, the ACI will be hard to stop. It would take weeks to assess the threat posed by America, come up with suitable countermeasures and vote on them. In the interim Mr Trump may upset the card table again. The EU could use the ACI to restrict American tech firms, cancel bank licences or target American intellectual property, potentially triggering tit-for-tat American moves. For now, its use seems unlikely.
As for mustering a coalition, two countries are in especially awkward positions. Poland is usually ferociously pro-American, relying on Uncle Sam to protect it from nearby Russia. Its government is split between Donald Tusk, its centrist prime minister, and Karol Nawrocki, its populist-right president. Before the latest round of threats Mr Tusk had warned that an American seizure of territory from a NATO ally would be “the end of the world as we know it”. But the country sent no troops to Greenland. On January 13th Mr Nawrocki, a MAGA ally, termed the dispute over Greenland “a matter between the Danish prime minister and President Donald Trump”. Viktor Orban, Hungary’s populist-right prime minister, concurred.
Then there is Britain. Not an EU member, it has charted its own course on tariffs. Sir Keir Starmer, the prime minister, likes to note that Britain was the first country to strike a deal with Mr Trump last spring. Having assured voters, and The Economist, that the special relationship was as strong as ever, Sir Keir can now see that when push comes to shove America lumps Britain with the EU, making this a painful moment. Previously more cautious than European leaders when criticising Mr Trump, the prime minister on Saturday termed the president’s tariffs threat “completely wrong”. Kemi Badenoch, leader of the opposition Conservatives, agreed they were a “terrible idea”. Nigel Farage of Reform UK, a populist-right party, cancelled a TV appearance on January 17th, citing health grounds.
Sir Keir said that he spoke to Mr Trump on January 18th and in the conversation stated that “applying tariffs on allies for pursuing the collective security of NATO allies is wrong”. A crucial question is whether he can continue to negotiate over tariffs independently from the EU, the only real “Brexit dividend” this government has pointed to, while sticking close to Europe on security. For Sir Keir to join the Europeans in tariff negotiations, as seems possible, would be an important shift.
Mr Trump’s conflict with Europe over Greenland represents a threat to America’s leadership of the West. Europe’s attachment to NATO and to transatlantic co-operation remains strong, but many of the continent’s leaders now doubt America can be trusted. Canada has just announced a new chapter in its “strategic partnership” with China, a move that looks increasingly like an effort to defend itself against its powerful neighbour. On January 17th the eight countries that sent troops to Greenland issued a common statement affirming their commitment to upholding their sovereignty. Europe’s quiet decoupling from America is becoming louder. ■