European governments are contemplating a significant retaliatory response to President Donald Trump’s recent tariff threats linked to his pursuit of Greenland, a move that has heightened transatlantic tensions and sparked debate in global markets.
European capitals are reportedly preparing a package of punitive economic measures—including new tariffs on U.S. imports worth as much as €93 billion ($108 billion)—as leverage ahead of critical diplomatic talks in Davos later this week. The plans, detailed by officials familiar with the matter, represent one of the strongest collective European rebuttals yet to Washington’s pressure tactics.
Under Trump’s proposal, eight European allies could face 10 % tariffs starting Feb. 1, rising to 25 % by June if they do not acquiesce to U.S. demands tied to Greenland. European leaders have branded the threat “unacceptable” and “coercive,” asserting that sovereignty and territorial integrity must be respected.
Retaliatory Tariffs and Anti-Coercion Measures on the Table
European Union officials are discussing how best to respond to the looming U.S. tariffs. One option under consideration is re-imposing suspended tariffs on American goods—including aircraft, bourbon, machinery and agricultural products—which were part of an earlier set of measures paused after the EU–U.S. trade deal last year.
Brussels is also contemplating the use of its Anti-Coercion Instrument (ACI)—often described as the EU’s “trade bazooka”—a tool designed to counter pressure from third countries through broad sanctions, trade restrictions, or limits on investment and intellectual property rights. The ACI, adopted in 2023, has never before been activated against an allied nation but could empower the bloc to hit U.S. digital and service sectors if leaders decide to proceed.
The discussions reflect growing frustration in Europe over what many see as an unprecedented tactic by the U.S., using trade barriers to extract political concessions. European Council President António Costa has called for extraordinary meetings of EU leaders to coordinate strategy, while EU Commission President Ursula von der Leyen has denounced the prospective tariffs as a strategic error that could undermine cooperation across the Atlantic.
Mixed Signals and Diplomatic Pressure
Not all European voices favor immediate retaliation. At the World Economic Forum in Davos, U.S. Treasury Secretary Scott Bessent urged European nations to refrain from punitive measures, warning that tit-for-tat trade actions could weaken global economic stability—drawing parallels with past U.S.–China tariff clashes.
Meanwhile, market reactions have been stark: global equities dipped, precious metals rallied, and currency markets showed increased volatility following Trump’s announcement. European Union diplomats are now balancing the economic risks of counter tariffs against the political imperative to defend allied interests and uphold international norms.
Next Steps
European leaders are expected to finalize their stance in the coming days, with emergency summits and negotiations on the agenda. If enacted, the retaliatory measures—ranging from tariffs on U.S. exports to broader economic countermeasures—could reshape trade relations between the world’s largest economies and reverberate through global markets.
