Greenland crisis: Unleashing Europe’s most powerful trade weapon on the US was previously unthinkable – not anymore
The mood in Brussels is a mixture of determination and deep concern.
There is, finally, a realisation that President Trump isn’t bluffing in his desire to “own” Greenland and a recognition that diplomacy with the erratic US leader might not work this time.
There is also unanimous agreement in European capitals that a forced seizure of Greenland cannot be allowed and the tariffs announced on Saturday against eight countries, including the UK, are wrong.
This is fast becoming the biggest transatlantic crisis in generations.
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There is no agreement in yet on how to respond. EU Ambassadors met in Brussels late on Sunday evening to discuss options and assess national positions.
French President Emmanuel Macron is pushing for the strongest response: triggering the EU’s anti-coercion instrument. This is a lever originally designed to fend off states hostile to the EU, such as China, not something to be used against one of the continent’s historically closest allies.
Taking this option would allow the EU to impose retaliatory tariffs on the US, limit US investment and trade with Europe and restrict access to the single market.
It’s the bloc’s most powerful trade weapon; it’s never been triggered before and using it against Washington would have been previously unthinkable. Not any longer.
It would almost certainly prompt a backlash from Trump, but it would show the EU is no longer willing to be pushed around by the White House.
Another option being considered is delaying the ratification of the EU-US trade deal that was agreed last summer.
The EU might feel like it’s on firm ground here, having finally signed a major free trade agreement this weekend with five South American countries known as the Mercosur bloc.
The countries involved in this agreement account for around 30% of global GDP and the deal will affect around 700 million consumers.
Although a suspension of the EU-US trade deal would also impact Europe, Brussels might feel it’s in a stronger position than Washington here.
The third option is to continue with diplomacy and keep fingers crossed for a breakthrough.
Trump said the new tariffs won’t kick in until 1 February – that gives the EU and London a window to act. Trump has repeatedly threatened tariffs against countries, only to then delay, reduce or quietly scrap them.
The World Economic Forum gets under way in the Swiss resort of Davos this week.
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Many of Europe’s leaders will be there, as will Trump and the NATO secretary general.
It will be an opportunity for some of them to get in the same room and have face-to-face talks with the US president.
But they will need a stick to wield, so Brussels has only a few days to come up with agreed measures of retaliation to use as leverage and then hope Trump climbs down the ladder.
