EU Threatens to Halt U.S. Trade Deal as Trump’s Greenland Tariff Dispute Reignites Transatlantic Tensions

 

Donald Trump

EU Threatens to Halt U.S. Trade Deal as Trump’s Greenland Tariff Dispute Reignites Transatlantic Tensions

Brussels/Rome — Relations between the European Union and the United States are once again sliding into turmoil as fresh tariff threats from President Donald Trump jeopardize last summer’s EU-U.S. trade agreement and prompt growing calls in Brussels for retaliation.

The latest standoff centers on Washington’s warning of new tariffs of up to 25% on countries that deployed troops to Greenland — a move European officials see as direct economic coercion tied to Trump’s renewed push to bring Greenland under U.S. control. The escalation has revived fears of a broader trade war just months after both sides narrowly avoided one.

Senior EU officials confirmed Sunday that ambassadors from the bloc’s 27 member states convened emergency talks to assess next steps, including whether to formally prepare the EU’s powerful Anti-Coercion Instrument (ACI) — a legal mechanism designed to counter economic intimidation by foreign governments.

An Élysée spokesperson said French President Emmanuel Macron will urge the European Commission to move toward activating the ACI if the new U.S. tariffs materialize. “This instrument was created precisely for situations of this nature,” the spokesperson said.

Valérie Hayer, leader of the European Parliament’s Renew Europe group, echoed that position in a letter to Commission President Ursula von der Leyen, writing that the EU must be ready to deploy its strongest trade tools if Washington proceeds.

German MEP Bernd Lange, chair of the Parliament’s trade committee, said the current dispute fits squarely within the ACI’s intended scope. “When trade is used as a political weapon, Europe must be able to respond,” he told Euractiv.

The “trade bazooka”

The Anti-Coercion Instrument, which entered into force in 2023 but has never been used, would allow the European Commission to impose sweeping countermeasures not only on goods, but also on services, investment, intellectual property protections, and access to EU public procurement.

However, triggering the tool would be a lengthy and politically complex process. It requires a formal Commission investigation, negotiations with the U.S., and approval from a qualified majority of member states — at least 15 countries representing 65% of the EU population.

Despite the hurdles, pressure is mounting. Former EU Economy Commissioner Paolo Gentiloni publicly urged Brussels to act, asking, “If not now, when?” Former Trade Commissioner Cecilia Malmström also criticized the U.S. escalation, calling the tariff threats “ridiculous” and stressing that “Greenland is not for sale.”

Trade deal on the brink

The dispute is already threatening to derail the EU-U.S. trade framework agreed last summer in Turnberry, Scotland. Senior figures in the European Parliament warned Sunday that ratification of the deal is now effectively frozen.

“Yesterday’s announcement by President Trump to introduce additional tariffs because of Greenland means we will not ratify last year’s EU-U.S. trade agreement,” said Siegfried Mureșan, vice-president of the European People’s Party group. He added that the Parliament’s three largest pro-European blocs — EPP, Socialists & Democrats, and Renew — are aligned on halting the process.

Even far-right lawmakers joined the call, with Patriots for Europe leader Jordan Bardella urging suspension of the trade framework.

Washington, however, is pushing back. U.S. Trade Representative Jamieson Greer warned that the EU should not link the Greenland dispute to the broader trade pact, arguing that Brussels has yet to fully implement its commitments under the July agreement, including lowering tariffs on U.S. industrial and agricultural exports.

As Brussels weighs its response, markets and multinational firms are watching closely. Whether the EU moves toward deploying its “trade bazooka” or seeks another last-minute compromise could shape transatlantic economic relations for years to come.