EU Eyes $108 Billion Tariffs as Trump Pushes Greenland Bid

President Donald Trump has announced plans for 10% tariffs on imports from eight European countries that back Greenland's sovereignty. The move, set to start on February 1, 2026, aims to pressure these nations into supporting a US bid to buy the territory. European officials are now weighing strong responses, including up to $108 billion in retaliatory tariffs.

Background

Greenland, a vast island in the Arctic under Danish rule, has long caught the eye of the United States for its strategic location and resources. Trump first raised the idea of purchasing it during his first term, calling it a national security need. Denmark rejected the proposal outright, and Greenland's leaders made clear they have no interest in being sold.

Tensions boiled over again this week. Trump tied new trade penalties directly to Greenland's status. Countries like Denmark, Germany, and others in the EU that affirm Greenland's right to self-determination now face these tariffs. The policy targets nations seen as blocking US interests in the region. Markets felt the shock right away. US stock futures dropped 0.8%, and European ones fell 1.2% in early trading on Monday.

This comes after a strong run for European stocks. The Stoxx Europe 600 index gained 36% in dollar terms since early 2025, outpacing the S&P 500. But Trump's announcement has erased some of that momentum. Investors worry about hits to sectors like autos and luxury goods, which rely heavily on US sales.

Key Details

The tariffs would hit imports from the targeted countries starting February 1. Trump has warned they could rise to 25% by June if no deal is reached for what he calls a 'complete and total purchase' of Greenland. The EU is looking at its anti-coercion tool, a set of measures to fight back against economic pressure from big trading partners.

Market Reactions

Global markets turned cautious fast. Safe assets like the Swiss franc, Japanese yen, and gold saw inflows as stocks slipped. European valuations, now at 16 times forward earnings, sit above their long-term average. Analysts say a 10% tariff could cut European earnings growth by 2 to 3 percentage points.

US markets were closed for a holiday, so the full reaction may play out later. Trading volumes stayed low, but experts expect more swings when normal hours resume. Some see the February start date as a window for talks to ease the pressure.

European Responses

EU leaders held urgent talks on countermeasures worth about €93 billion, close to $108 billion. Officials in Brussels are debating whether to negotiate or hit back hard. Germany's industry groups called Trump's demands absurd, warning of damage to both sides.

Danish Prime Minister Mette Frederiksen spoke out firmly.

"Europe will not be blackmailed by anyone, no matter how powerful they think they are. Greenland is not for sale, and neither is our sovereignty."

– Danish PM Mette Frederiksen

Other nations echoed this. France and Italy signaled readiness to join any EU-wide action. Private talks with Washington are underway, but public stances remain tough.

What This Means

Trade between the US and EU runs into trillions of dollars each year. These tariffs could raise costs for American buyers of European cars, machinery, and wines. In turn, EU retaliation might target US farm goods, planes, and tech products. Both economies stand to lose jobs and growth if this drags on.

For Greenland, the stakes involve more than money. Its 56,000 people prize their autonomy. US interest stems from military bases there, rare earth minerals, and shipping routes opening with climate change. A purchase deal seems far off, but the tariff threat keeps pressure on.

Markets now watch for Trump's next steps. Will he sign the order soon? Can diplomats find a compromise? European unity could be tested if smaller nations feel squeezed. Broader effects might spill into global supply chains, already strained from past trade wars.

Analysts point to past patterns. Sudden tariff hikes often spark short-term sell-offs, but clarity can bring rebounds. Investors hold positions in bonds and commodities, waiting for signals from leaders on both sides.

The Greenland issue ties into bigger US goals in the Arctic, where Russia and China also compete. Tariffs add a trade weapon to the mix, raising risks of wider fallout. European firms brace for slower US demand, while US exporters eye lost markets abroad.

Talks continue behind closed doors. EU foreign ministers meet this week to align views. Trump aides hint at flexibility if Greenland talks advance. For now, the world watches as old allies square off over a frozen territory half a world away.