Trump is provoking a major trade war with Europe. What are the risks for the US, the EU, and support for Ukraine

Threats Donald Trump enter duties and force Denmark to sell Greenland The deepest crisis in US-EU relations is unfolding. For the first time, Europe is considering a "tariff bazooka" – a tool that could severely impact America's tech giants.LIGA.net reread CNN, BBC, The Financial Times, The Economist, interviewed experts and figured out where the "trade war" between allies is leading.How Trump is provoking the EU into a "tariff bazooka," and what it isTrump threatened to impose a 10% tariff on goods from Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and Great Britain starting February 1. These countries held the "Arctic Resilience" military exercise in Greenland to show solidarity – since the beginning of the year, Trump has been making claims to the Danish island.In recent weeks, he has repeatedly stated that he has a number of options on the table, including the possible use of military force. Trump threatened that tariffs would rise to 25% if the Danes did not agree to a "deal for America to fully buy Greenland" by June 1.Greenland is a sparsely populated but resource-rich island between North America and the Arctic, which makes it convenient for early warning systems in case of missile attacks on the United States and for monitoring vessels in the region.Polls indicate that 85% of Greenlanders are against joining the US. Mass protests against Trump's plans for the island took place in Danish cities and in Greenland's capital, Nuuk.Tariffs via Greenland and possible EU economic responses could lead to significant price increases on both sides of the Atlantic, which could weaken the economies of both.ReferenceEU and USA have the largest bilateral trade and investment relations, and the most integrated economies in the world. Together, they account for 30% of global trade in goods and services, and 43% of global GDP. In 2024, trade between them reached €1.68 trillion.France has called on the EU to respond by applying the ACI instrument, which has never been used since its adoption in 2023 – it is called a "bazooka" – restrictions on investments and export of services for large technology companies."European leaders are ready for a tough game. For American businesses, this is another period of uncertainty regarding investments and exports to the US," says Carsten Brzeski, head of ING's macroeconomic department.This uncertainty has caused companies in the US to put a hold on hiring new employees in 2025.Trump's threats risk destroying the trade agreements that the U.S. concluded with Great Britain and the EU last summer, and further exacerbating relations with America's closest allies, says Dan Hamilton, a senior fellow at the Brookings Institution.The EU concluded a trade agreement with Trump last summer, but has not yet signed it. Now there are voices in Europe saying not to sign it. Brussels and Washington reached an agreement: 15% tariffs on all EU goods in the US, and 0% tariffs on US goods in the EU.MEP Manfred Weber stated that "given Trump's threats regarding Greenland, the approval of a US-EU agreement is impossible at this stage."Trump, who will be in Davos for the economic forum on Wednesday and Thursday, plans to hold closed-door talks with European leaders and participate in a broader discussion among Western countries that support Ukraine.European officials hope that their threats of retaliatory tariffs will increase bipartisan pressure in the US on Trump and force him to back down from his threats."China and Russia are rejoicing." What Trump's threats are changing"This will have a negative impact on the global economy," says Stephen Durlauf, a professor at the University of Chicago's School of Public Policy.ReferenceAccording to US government data, in 2024, the United States traded goods with Germany worth $236 billion, with the United Kingdom worth $147.7 billion, with the Netherlands worth $122.27 billion, with France worth $103 billion, with Sweden worth $40 billion, with Norway worth $17 billion, and with Finland worth $15 billion.Trump's tariffs are aimed at several members, not the entire EU. Eight countries can reorient trade within the bloc to circumvent them. "There are no tariffs between Italy, Germany, and France. Anyone can move goods to another country," says Joseph Foudy, a professor at New York University's Stern School of Business.The largest trading partners of the United States are strengthening trade with other countries. Last week, Canada entered into a "strategic partnership" with China, including tariff reductions and the purchase of Chinese electric vehicles.The EU has signed agreements with Mercosur (an economic union of South America, which includes Argentina, Bolivia, Brazil, Paraguay, Uruguay, and as associated members, Guyana, Ecuador, Colombia, Peru, Suriname, and Chile).Ed.), which concluded 25 years of negotiations."We could alienate our most important allies. The price of such a policy is that it emboldens our enemies," says Fauci.EU foreign policy chief Kaja Kallas She stated that "China and Russia are rejoicing" at Trump's statements. "They benefit from disagreements between allies," she added."Quiet secession on both sides of the Atlantic." What are the consequences for Europe and UkraineThe likelihood of tariffs being introduced is high. Trump has grown accustomed to using tariffs as leverage over the past year. He believes it works, explains LIGA.net Volodymyr Dubovyk, a visiting professor at Tufts University (US).Trump likes to be in the spotlight. He doesn't understand why the issue is so sensitive for Europeans, why they wouldn't sell an island where almost no one lives, says Dubovyk.In his opinion, the EU is unlikely to leave these threats unanswered. The trade agreement between the US and the EU is under threat. We can expect broad solidarity from European voters and politicians – even the far-right from Britain to Germany criticize Trump. So, escalation is possible. This is bad news for the transatlantic community and Ukraine, which depends on their help.Trump will not impose tariffs against those who responded and immediately went to negotiations, adds LIGA.net Oleksandr Kraiev, head of the North America program at the Ukrainian Prism Foreign Policy Council.Everyone says Trump is chaotic, but that's his element of pressure. If he even for a second thinks that the Europeans are not playing fair, he will impose it, says Kraev.It will take some time from the announcement of the tariffs until they take effect. In addition, the tariffs may be canceled by a decision of the US Supreme Court, which is considering Trump's use of emergency powers.If a customs war begins, manufacturers in the EU and the US will lose money. This will be a blow to future contracts for the production of a significant portion of goods with high added value. It will not be a catastrophe, but the profits of large businesses will fall. It will hit Europeans harder – many economies are geared towards the US.Europeans, especially the Danes, will never agree to sell Greenland, Kraev is convinced. There will be further negotiations. Trump doesn't have to push the issue to the end here and now.Nevertheless, the last three electoral cycles in Greenland have been won by the autonomist party – those who are willing to consider some form of independence or greater autonomy in the future.If Trump wins partially now – for example, Greenland and Denmark refuse Russian and Chinese investments, transfer certain resources to the US, and America expands its military bases there – in a few years, he can initiate a referendum on the island, where, thanks to American influence, he can conclude some agreement with the island, Kraev believes. Thus, the US retains leverage over Europe and, in particular, over the Danes.Europeans have long hoped that diplomacy could put an end to misunderstandings with Trump. After all, he had spoken about Greenland in the past but did nothing. For European leaders who want to warn the US, the simplest response is retaliatory trade actions. However, the EU is hesitant to do so because it wants to maintain American support for Ukraine.Trump has cut off all military and financial aid to Kyiv, and Europe provides Kyiv with money and most of its weapons. But the US sells a lot of critical weapons that Europeans cannot replace – such as Patriot missiles and intelligence data.If the European Union decides that the US threats to Greenland outweigh the risk to Ukraine, it could indeed use its most powerful economic weapon – ACI.Trump's conflict with Europe over Greenland threatens US leadership in the West. Europe's commitment to NATO remains strong, but many leaders on the continent already doubt that America can be trusted. The quiet separation on both sides of the Atlantic is becoming louder.Read alsoThe parable of the mad collector and Trump's "Greenland mania"

Trump is provoking a major trade war with Europe. What are the risks for the US, the EU, and support for Ukraine

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