Trump Threatens 25% Tariffs on Eight European Countries Over Greenland Dispute

Germany faces the most severe exposure. Direct exports to the U.S. represent 2.5% of German GDP, with the automotive industry particularly vulnerable. German car exports to America already fell 14% in the first three quarters of 2025 under existing tariffs.

Ireland ranks as the most exposed EU country due to its pharmaceutical sector, which accounts for nearly 30% of U.S. pharmaceutical imports. Italy faces high exposure in transport equipment and automotive manufacturing.

Industries Under Pressure

Automotive: Germanys car industry, which accounts for 65% of EU auto exports, faces devastating impacts. Companies like BMW, Mercedes-Benz, and Volkswagen are absorbing tariff costs or considering production shifts. Economic models estimate German automotive production could decline by 5.3%.

Pharmaceuticals and Chemicals: European pharmaceutical exports to the U.S. were valued at approximately €120 billion in 2024. The chemical industry already saw a 9.5% decline in U.S. exports during the first nine months of 2025.

Steel and Aluminum: These sectors already face 50% tariffs. European steel demand has fallen 25% over the past five years, with Frances industry minister warning the sector is “close to the breaking point.”

Europes Response Options

European leaders reacted swiftly and forcefully. French President Emmanuel Macron called the tariffs “unacceptable” and is pushing the EU to activate its most powerful trade weapon: the Anti-Coercion Instrument.

This “trade bazooka,” adopted in 2023 but never used, could restrict U.S. companies access to European markets, limit foreign investment, and target American tech giants and financial services.

The EU also prepared approximately €100 billion in retaliatory tariffs targeting U.S. exports. This package was suspended after a July 2025 trade deal but could be reactivated when its suspension expires on February 7, 2026.

Swedens Prime Minister Ulf Kristersson stated “We will not allow ourselves to be blackmailed.” British Prime Minister Keir Starmer said applying tariffs on allies for pursuing NATO security is “completely wrong.”

Eight targeted countries issued a joint statement warning that tariff threats “undermine transatlantic relations and risk a dangerous downward spiral.”

The Greenland Context

Greenland is a semi-autonomous territory of Denmark with 57,000 residents. The island holds vast reserves of critical minerals and strategic Arctic positioning.

According to a January 2025 poll, 85% of Greenlanders oppose joining the United States. Only 6% support the idea, with 9% undecided. Protests erupted in both Greenlands capital Nuuk and Copenhagen against American acquisition attempts.

Denmark has increased its military presence in Greenland with support from NATO allies. The joint military exercises that Trump cited as justification for tariffs were described by European leaders as routine Arctic security cooperation.

Legal Challenges Ahead

The legal foundation for these tariffs faces serious questions. Trump is using the International Emergency Economic Powers Act (IEEPA), a 1977 law designed for national emergencies. The statute doesnt mention tariffs at all.

The Supreme Court is currently reviewing whether Trump can use IEEPA to impose tariffs. During oral arguments in November 2025, both conservative and liberal justices expressed skepticism about the administrations position.

Lower courts already ruled that Trump exceeded his authority. If the Supreme Court agrees, tariff refunds could exceed $195 billion for fiscal 2025 alone. A decision is expected in January 2026.

Market Reactions

Financial markets responded negatively to the tariff announcements. The dollar has been weakening rather than strengthening, contrary to typical trade war patterns. Analysts forecast potential 25-30% dollar depreciation.

Cryptocurrency markets also showed vulnerability to tariff turbulence. Bitcoin plunged from above $126,000 to below $106,000 during October 2025 tariff-related market chaos, demonstrating correlation with traditional markets rather than serving as a hedge.

Investment is shifting from Europe to America due to U.S. tax incentives. European companies captured only 20% of global AI funding in 2025, down from previous years, as capital flows toward the United States.

The Trade Deal at Risk

The Greenland tariff threat undermines a July 2025 U.S.-EU trade agreement that set tariffs at 15% in exchange for major European concessions. The EU committed to €750 billion in U.S. natural gas purchases, €600 billion in American investments, and €35 billion in U.S.-made AI chips.

European Parliament members are threatening to block ratification of this deal. Manfred Weber, leader of the Parliament‘s largest party bloc, stated that “approval is not possible at this stage” given Trump’s threats.

The European Commission scheduled an emergency meeting of ambassadors from all 27 EU countries for January 19, 2026, to coordinate responses.

NATO Alliance Under Strain

The tariff threats represent the most severe economic pressure among NATO allies since World War II. The 75-year transatlantic security partnership faces unprecedented tensions.

A CNN poll found that 75% of Americans oppose U.S. attempts to take control of Greenland, showing widespread public resistance to the administrations territorial ambitions.

Bipartisan opposition exists within the U.S. Congress. Senate Democrats announced plans to introduce legislation blocking the tariffs. Even some Republicans, including Representative Don Bacon, called Trumps threats to NATO countries “shameful.”

EU foreign policy chief Kaja Kallas warned that “China and Russia must be having a field day” as divisions among allies benefit geopolitical competitors.

The Road Ahead

Multiple scenarios could unfold over the coming months. The Supreme Court decision on IEEPA authority could invalidate the legal foundation for these tariffs. European retaliation through the Anti-Coercion Instrument could escalate into a full trade war. Negotiations might produce a last-minute compromise.

The situation remains fluid as February 1 approaches. European leaders emphasize unity while preparing multiple response options. American importers face uncertainty about potential refunds and future tariff policies.

What began as Trump‘s renewed push to acquire Greenland has evolved into a major transatlantic crisis threatening trade relationships, NATO cohesion, and global economic stability. The next few weeks will determine whether diplomacy can resolve the standoff or whether the world’s largest trading partnership fractures under the weight of territorial ambitions and economic nationalism.