Topline
Trade between the U.S. and Europe may soon be disrupted as President Donald Trump escalates his threats for American control of Greenland, with some European officials pushing to restrict trade and curb market access.
European leaders have condemned Trump’s push for U.S. control of Greenland.
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Key Facts
Trump on Saturday announced he would impose a 10% tariff on eight European countries that deployed military personnel to Greenland, including Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the U.K.
Those levies, effective Feb. 1, would increase to 25% on June 1 and remain at that level until the U.S. completes its purchase of Greenland, Trump said.
Deutsche Bank analyst Jim Reid wrote in a note Tuesday there are “growing fears” that Europe would impose retaliatory trade moves, adding “markets have reacted” already to Trump’s tariff threats and there’s “clearly room for bigger moves if the rhetoric increases further.”
Europe May Raise U.s. Tariffs—or Restrict Trade
Several European nations are considering imposing tariffs on U.S. imports or restricting American companies from the EU market, disrupting trade on goods valued at more than $109 billion, the Financial Times reported, citing unnamed European officials. The retaliatory levies are expected to be presented in meetings with Trump at the World Economic Forum in Davos, Switzerland, later this week. French President Emmanuel Macron has reportedly requested the EU impose its Anti-Coercion Instrument, a trade policy tool adopted in 2023 often referred to as the “trade bazooka,” allowing the bloc to activate countermeasures against the U.S., which may include tariffs, restricted trade or restricted investments, among other tactics. The EU may also demand reparations as part of the policy. Bernd Lange, who chairs the European Parliament’s trade committee, also called on the bloc to activate the tool in a statement on X, citing Trump’s “unbelievable” tariffs.
European Pensions May Reduce U.s. Exposure
Anders Schelde, chief investment officer of Danish pension fund AkademikerPension, told Forbes in a statement Tuesday it would exit U.S. Treasuries by the end of the month. The firm has relied on U.S. Treasuries for liquidity and risk management for “many years,” Schelde said. A move to reduce exposure is “rooted in poor U.S. government finances” and not the “ongoing rift” between the U.S. and Europe, he noted, “but of course that didn’t make it more difficult to take the decision.” Some Swiss pension funds reportedly reduced exposure to U.S. assets last year, including U.S. Treasuries, amid growing concerns about U.S. fiscal policy. George Cipolloni, a fund manager at Penn Mutual Asset Management, told the Associated Press shortly after Trump announced his “Liberation Day” tariffs in April 2025 that investors were exiting U.S. Treasuries over fears the U.S. was “losing its standing as the safe haven.” The U.S. bond market is the “biggest and most stable in the world,” Cipolloni said, “but when you add instability, bad things can happen.” European countries hold about $8 trillion of U.S. bonds and equities, Deutsche Bank said in a note Sunday.
Contra
Agathe Demarais, a policy fellow at the European Council on Foreign Relations think tank, wrote Tuesday there is “no good reason for the EU to be afraid of U.S. tariff threats,” adding tariffs imposed by the bloc would “amount to self-harm” as European consumers would “bear the brunt of such measures.” Instead of imposing tariffs, she suggested the bloc should threaten to curb market access for U.S. social media platforms—Meta’s Facebook, Instagram and WhatsApp, as well as Elon Musk’s X—which rely heavily on the European market. The EU may benefit from no response at all, Demarais said, as the U.S. Supreme Court may rule against Trump’s tariffs in the coming days.
Key Background
Trump, who called for U.S. control of Greenland during his first presidency, has revived his threats to take over the Danish territory. He has cited national security concerns, recently claiming China and Russia have sought to control Greenland and arguing there is “not a thing” Denmark can do about it. Greenland Prime Minister Jens-Frederik Nielsen said Tuesday that an invasion of Greenland “can’t be ruled out,” though he noted it would be unlikely. European Commission President Ursula von der Leyen said Europe’s response to Trump’s latest tariffs would be “unflinching, united and proportional,” adding to criticism from other European leaders, including Belgian Prime Minister Bart De Wever, who said Trump would “make us slaves” unless the bloc took action.
Further Reading
Source: https://www.forbes.com/sites/tylerroush/2026/01/20/europe-may-restrict-us-trade-over-trumps-greenland-threats/
