The European Union is gearing up for a major trade and strategic standoff not seen in decades. Brussels and European capitals are working on a retaliation package that could reach 93 billion euros in response to Donald Trump’s threats of imposing punitive tariffs and his openly stated desire to take control of Greenland.
According to several European officials, this response could involve a combination of tariffs targeting US exports on a large scale and, more unusually, restrictions on access to the European market for certain American companies. The goal is clear: to have a credible leverage before the crucial discussions this week at the World Economic Forum in Davos.
Trump wants Greenland: Europe responds with its own tariffs
The situation is deemed serious enough to be called a major crisis in the relations between Western allies. The plan for trade sanctions, initially prepared last year and then put on hold to avoid escalation, was brought back to the table after Trump threatened to impose 10% tariffs from February 1 against the UK, Norway, France, and several European countries involved in military exercises in Greenland.
At the same time, the Union is considering activating its anti-coercion tool, a legal instrument adopted in 2023 but never used until now. This would allow to limit American investments or restrict certain service activities, especially in the digital sector. For Paris, it is a classic case of economic coercion.
A transatlantic crisis without recent precedent
The markets reacted swiftly. European equity futures contracts pointed to a sharp decline, while gold surged to new records, exceeding $4,600 per ounce. This movement reflects a risk-averse climate fueled by fear of an open trade conflict and a lasting deterioration of transatlantic cooperation.
For investors, the stake goes beyond trade. A political and military rupture around Greenland poses an existential problem for European security, at a time when the continent remains engaged in the Ukrainian issue and still heavily relies on the Western defense architecture.
The markets already under tension
Despite the firm stance, European diplomats emphasize a strategy that combines pressure and de-escalation. The message is clear: the Union has powerful tools and is ready to use them, but it also leaves a window for a negotiated solution. Several Member States argue for avoiding any verbal escalation before direct discussions with Trump in Davos.
On the European side, a red line is clearly drawn: the sovereignty of Greenland and Denmark is non-negotiable. However, officials hope that the threat of massive economic retaliation will be enough to prompt a retreat from Washington, or at the very least, to calm tensions.
Between firmness and seeking a way out of the crisis
Beyond the Greenland case, this episode acts as a revealer. The European Union is faced with the need to defend its interests against an increasingly unpredictable ally, assuming an economic and political power struggle. Brussels’ ability to quickly coordinate a credible response will be closely watched, both by the markets and international partners.
In an increasingly fragmented world, Europe is testing its own limits. And this time, the stakes are not only measured in billions of euros in tariffs but in strategic credibility.
