The European Union is set to convene an emergency summit following escalating trade tensions initiated by U.S. President Donald Trump. The President has threatened to impose new tariffs on European allies unless the United States is permitted to purchase Greenland. This situation has prompted Antonio Costa, President of the European Council, to announce plans for an extraordinary meeting of EU leaders in the coming days, indicating strong support among member states for both Denmark and Greenland.
The summit is expected to occur in person on January 22, 2024. In his statement, Costa emphasized that EU leaders are prepared to counter “any form of coercion,” while also expressing a commitment to engage constructively with the United States. This move reflects increasing concern in Brussels that the ongoing dispute could escalate into a larger transatlantic trade confrontation.
The tension escalated when Trump announced that nations including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland would face a 10% tariff starting February 1, 2024, with the rate rising to 25% from June 1, 2024. The tariffs are framed by Washington as necessary for security and strategic interests in the Arctic region.
Adding to the complexity, an EU diplomat informed Reuters that a previously suspended retaliatory tariff package worth €93 billion on U.S. goods will automatically be reinstated on February 6, 2024, unless an agreement is reached. These measures were initially put on hold last August following a temporary trade deal between Brussels and Washington, which now seems to be in jeopardy.
UK Prime Minister Keir Starmer has voiced his opposition to Trump’s tariff threats, describing them as “wrong.” He highlighted that security in the High North is a shared priority for NATO allies. Starmer has held discussions with Mette Frederiksen, the Prime Minister of Denmark, Ursula von der Leyen, President of the European Commission, and Mark Rutte, NATO Secretary General, before communicating with the U.S. President.
The escalating dispute is placing additional strain on transatlantic relations, with market observers closely monitoring whether the upcoming EU summit can mitigate tensions before the automatic tariffs on both sides take effect. The situation regarding Greenland introduces new geopolitical risks into EU–U.S. relations, heightening the likelihood of further tariff escalations, which could adversely affect European trade sentiment as February approaches.
As a result of these developments, the euro has seen a slight decline in early trading against the U.S. dollar, alongside most other currencies. The unfolding situation continues to generate volatility in financial markets, as stakeholders remain cautious amid the potential for trade conflicts to escalate.
