An additional 10% tariff is set to take effect Feb. 1, 2026, on goods from Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland. How will the EU respond?

In today’s sub-chapter:

Just when the U.S. and EU averted a trade war with a 15% deal in 2025, President Trump is back again with a new set of tariff threats on European nations.

Last Saturday, he threatened an additional 10% tariff on eight countries (Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland) for opposing American control of Greenland, a semi‑autonomous Danish territory.

Trump’s plan: tax all goods from these nations at 10% starting Feb. 1, rising to 25% on June 1, until a “complete and total purchase of Greenland” happens.

This is the first time tariffs have been used to address non-trade issues. How will the EU respond? Will it use the classic “trade war tit-for-tat tariff” retaliation, or will it retaliate forcefully and finally fire its famous trade bazooka? 

The EU created the Anti‑Coercion Instrument (ACI) in 2023 to protect itself against systemic economic pressure by third countries. It allows Europe to:

In theory, Europe could deploy this against the U.S. if Trump’s tariffs materialize. Which would be ironic because this weapon was originally thought up to counter China.

Transatlantic trade reached €1.68 trillion in 2024, making the EU‑U.S. relationship the largest bilateral trade and investment partnership in the world. Every day, over €4.6 billion in goods and services crossed the Atlantic. So, Trump’s new tariffs could disrupt trade worth trillions and affect many businesses on both sides of the Atlantic.

Experts say the impact won’t be massive, though. Economists at Goldman Sachs project that a 10% U.S. tariff on these eight countries could slow trade enough to lower GDP by 0.1%–0.2%. Germany would take the hardest hit, losing around 0.2% under a targeted tariff and up to 0.3% under a blanket levy.

Even so, tariffs would likely hurt American households. In fact, this might turn into a game of “give me Greenland or Americans pay more for their everyday goods.” I’m saying this because a Kiel Policy Brief study shows that tariffs are mostly paid by American consumers (more on this later).

Anyway, it’s interesting to know what authority Trump will use to impose the tariffs. He might use Section 232, but it’s unclear how he would justify turning the Greenland dispute into a national security issue.

EU leaders are standing their ground. EU Chief Ursula von der Leyen, French President Emmanuel Macron, and German Chancellor Friedrich Merz vowed the bloc will stay “united, coordinated and committed” to upholding Europe’s sovereignty in the face of Trump’s tariff threats. They also issued a strongly worded letter saying Greenland belongs to its people and Denmark. 

Of course, the infamous “strongly worded letter” or “joint statement.” It’s more of a showing of disapproval publicly, but will it actually stop Trump?

Macron has already urged the EU to consider firing its never-before-used trade “bazooka,” but can Europe afford to risk escalating tensions with the U.S.? 

Last July 2025, the EU agreed to a deal with the U.S. that looked one-sided: it would pay 15% tariffs while dropping most tariffs on U.S. goods to zero. Farmers criticized it for hurting their businesses, and many Europeans saw it as a humiliation. But the EU didn’t fire the bazooka! 

EU officials at an emergency meeting in Brussels reportedly held back the big bazooka to focus on talks with the U.S., but they are preparing a €93 billion retaliation. In case, this would be one of the largest retaliation packages in modern European history.

We can’t blame the EU for choosing caution; either it’s ready to make a concession or hoping Trump would back down and drop his threat. But looking at the bigger picture, the Greenland tariff threat is probably the wake-up call it needs to build a tougher trade mechanism, especially one that isn’t too dependent on the U.S.

If Trump’s new tariffs hit, European exporters may reduce volumes, shift customers, or adjust supply chains to avoid U.S. exposure. Well, some countries aren’t on the list (e.g., Spain and Italy), so experts say businesses could reroute their shipments through those EU members to avoid the tariffs. 

The threats may also accelerate Europe’s diversification of its trade relationships, such as more engagement with Asia and other partners. The EU has recently expanded its trade ties with Indonesia and is actively pursuing free trade agreements with the Philippines, Thailand, and Malaysia. So, we might see more European businesses shifting operations, exports, and investments toward these markets if the tariffs are imposed.

But there’s a bigger challenge for companies: uncertainty and the changing structure of the rules-based global trade system. Tariffs were supposed to address trade issues, and to us, imposing tariffs over the Greenland dispute is breaking every trade rule in the book.

How can businesses plan and adjust when tariffs can change at a moment’s notice for reasons that no one could have imagined?

Anyway, going back to the Greenland tariffs. We might not see the EU’s big bazooka fired, but let’s hope it can come up with something tough and strong enough to defend its trade and send a powerful message to the U.S.

Contrary to President Trump’s favorite trade rhetoric, U.S. imports aren’t paid for by foreign exporters, according to new research from the Kiel Institute for the World Economy.

Below are the key findings: 

Maybe it’s time for policymakers to recognize that tariffs are hurting American importers and consumers. Companies relying on imported goods should plan for higher prices and potential supply disruptions, while policymakers should consider alternative trade strategies that achieve their economic and “protectionist” goals without disproportionately burdening American households.

Caveat: We aren’t affiliated with or endorsed by the Kiel Institute for the World Economy. This content is for informational purposes only.

🤝 Canada Reaches Trade Deal with China. The deal reduces tariffs on Canadian canola seed to about 15% and removes anti-discrimination tariffs on canola meal, lobsters, crabs, and peas, while allowing up to 49,000 Chinese electric vehicles into Canada at a 6.1% tariff. It also expands trade access and investment, with Canada targeting a 50% increase in exports to China by 2030.

🍷 Trump Threatens 200% Tariffs on French Wine. President Trump threatened 200% tariffs on French wine and champagne after France declined to join his proposed Gaza ‘Board of Peace’, which would oversee Gaza’s rebuilding and public services.“Nobody wants him because he’s going to be out of office very soon. I’ll put a 200% tariff on his wines and champagnes and he’ll join.” This comes as he continues to pursue his plan to acquire Greenland.

📈 China Hits 5% Growth Target Despite Tariffs. China’s exports reached a record $1.19 trillion in 2025, helping the economy achieve its 5% growth target despite U.S. tariffs. Strong exports to countries outside the U.S. offset weak domestic demand, highlighting China’s reliance on trade. Analysts warn this dependence increases exposure to global trade tensions, even as manufacturing and shipping continue to grow.

Last week, Canada and China reached a major trade deal to reduce tariffs and restart key exports. But years of trade growth, disputes, and negotiations had led up to this moment. Let’s take a look back at the key events that shaped Canada–China trade over the decades.

Canada’s new 25% steel derivative surtax came into force on Dec. 26, 2025. It applies to many products containing steel, and it’s based on the full customs value, not just the steel. Which can make importing more expensive.

To help businesses understand the rules, GHY International, a Canadian-based customs brokerage and trade compliance provider, hosted two webinars covering the surtax, practical compliance tips, and strategies to manage costs. In case you missed the live webinars, you can watch the recordings on demand.

1. Canada’s 25% Steel Derivative Surtax – Live Q&A Briefing

Watch the recording!

2. Canada’s 25% Steel Derivative Surtax 2.0

Watch the recording!

In his latest LinkedIn post, Alex Adamo, a chief negotiator and investor, candidly shares his perspective on the Greenland dispute.

He argues that Europe needs to drop the carrot and pick up the stick, starting by strengthening NATO ties and responding firmly to tariffs to protect its interests and control the negotiation.

Follow Alex on LinkedIn for more insights on high-stakes negotiations, strategy, and global trade.

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