EU considers tariffs and its ‘trade bazooka’ as reply to U.S. Greenland threat
European leaders have signalled they will respond if Washington imposes threatened tariffs over Greenland, weighing retaliatory duties, suspension of a trade deal and the Anti-Coercion Instrument.
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By Torontoer Staff
European leaders have moved quickly after the White House threatened tariffs on eight countries over objections to a potential U.S. move on Greenland. Officials in Brussels say they prefer diplomacy, but they are preparing economic countermeasures including retaliatory tariffs and the bloc’s Anti-Coercion Instrument.
U.S. President Donald Trump said he would impose a 10 per cent import tax in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland, rising to 25 per cent on June 1 unless a purchase of Greenland by the United States proceeds. The announcement prompted emergency consultations across Europe and at EU headquarters in Brussels.
What Washington announced
The tariff threat was posted on social media and set deadlines for a stepped increase in duties. European officials immediately described the move as economic coercion and sought to defuse the dispute through diplomacy ahead of a scheduled meeting of EU leaders in Brussels later this week.
EU response so far
European Commission spokesperson Olof Gill said the priority is to engage, not escalate, while stressing that the EU has tools at its disposal and is prepared to respond should the tariffs be imposed. EU leaders will hold emergency talks after the World Economic Forum in Davos.
Our priority is to engage, not escalate. Sometimes the most responsible form of leadership is restraint.
Olof Gill, European Commission spokesperson
António Costa, president of the European Council, said leaders agree that tariffs would undermine transatlantic relations and are incompatible with the EU-U.S. trade agreement. Still, he said EU states are ready to defend themselves against coercion.
Tools on the table
Officials list three main economic responses that the EU could deploy if the U.S. follows through: impose retaliatory tariffs, suspend or withdraw support for the negotiated trade framework with the United States, and use the Anti-Coercion Instrument, informally dubbed the trade bazooka.
- New retaliatory tariffs on targeted U.S. goods.
- Suspension of the U.S.-EU trade framework agreed in June, which would reopen the option to levy previously suspended duties worth about €93-billion.
- Use of the Anti-Coercion Instrument to sanction individuals or entities deemed to be applying undue pressure on the EU.
The June framework between the EU and U.S. was due for ratification by the European Parliament this week, but the leader of the largest group in Strasbourg, Manfred Weber, said approval was not possible at this stage. If suspension of previously authorised levies is not extended, those duties are scheduled to return on Feb. 7.
It’s tough for the Europeans to find that space where they can both demonstrate strength without incurring significant retaliation.
Penny Naas, German Marshall Fund
There is reluctance among some capitals to escalate for fear of broader economic fallout. Ireland’s finance minister Simon Harris urged calm, saying the trade deal was hard won and disruption could have significant consequences.
Economic stakes and broader strategy
EU-U.S. trade in goods and services amounted to €1.7-trillion in 2024, or roughly €4.6-billion a day, according to Eurostat. Europe’s top exports to the U.S. include pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits, giving the bloc leverage but also exposure if tensions rise.
The Anti-Coercion Instrument, created in 2021 after Beijing restricted trade with Lithuania, is designed primarily as a deterrent. The commission has said the instrument will work best if it never has to be used, but it gives Brussels a legal route to target individuals, companies or sectors applying political pressure.
Beyond immediate countermeasures, the EU is pursuing longer-term diversification of trade partners. Brussels recently advanced agreements with Mercosur, Indonesia and Japan, and is negotiating with the United Arab Emirates and India. Commission officials argue those deals expand Europe’s options on the global stage.
We can see very clearly that the value of responsible, mature leadership on the global stage is paying off in terms of the EU trade agenda.
Olof Gill, European Commission spokesperson
What happens next
EU leaders will meet in Brussels after the World Economic Forum to coordinate a response. That summit will test how united the bloc can remain, balancing a desire to avoid escalation with pressure from member states to protect sovereignty and trade interests.
France and Germany have signalled support for a firm approach if the tariffs are enacted. Analysts say the EU’s choices are clear but costly: deploy limited measures and risk appearing weak, or use stronger tools and risk an economically damaging tit-for-tat.
For now, European capitals are prioritising diplomatic channels while keeping economic levers ready. The coming days will determine whether the dispute returns to negotiations or escalates into a trade confrontation with consequences across the Atlantic.
EUUnited StatestradeGreenlandtariffsanti-coercion
