Trade between the United States and Europe could soon be disrupted as President Donald Trump escalates his threats of American control over Greenland, and some European officials push to restrict trade and limit market access.
Key data
Trump announced Saturday that he would impose a 10% tariff on eight European countries that deployed military personnel to Greenland, including Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the United Kingdom.
Those levies, which take effect on February 1, would increase to 25% on June 1 and remain at that level until the United States completes its purchase of Greenland, Trump said.
Deutsche Bank analyst Jim Reid wrote in a note Tuesday that there are “growing fears” that Europe will impose retaliatory trade measures, adding that “markets have already reacted” to Trump’s tariff threats and that “there is clearly room for bigger moves if the rhetoric escalates further.”
Europe could raise US tariffs or restrict trade
Several European nations are considering imposing tariffs on American imports or restricting American companies’ access to the EU market, which would disrupt trade in goods valued at more than $109 billion, the Financial Times reported, citing unnamed European officials.
The retaliatory levies are expected to be presented at meetings with Trump at the World Economic Forum in Davos, Switzerland, later this week. French President Emmanuel Macron has reportedly called on the EU to impose its Anti-Coercion Instrument, a trade policy tool adopted in 2023, often called a “trade bazooka,” that allows the bloc to activate countermeasures against the United States, which may include tariffs, restricted trade or restricted investments, among other tactics.
The EU can also demand reparations as part of the policy. Bernd Lange, who chairs the European Parliament’s trade committee, also called on the bloc to activate the tool in a statement on March 15, citing Trump’s “incredible” tariffs.
European pensions could reduce US exposure
Anders Schelde, chief investment officer at Danish pension fund AkademikerPension, told Forbes on Tuesday that he would exit US Treasuries at the end of the month. The firm has relied on these bonds for liquidity and risk management for “many years,” Schelde said.
The decision to reduce exposure is based on the precarious finances of the US government and not on the “continuing rift” between the United States and Europe, he noted, “but of course that did not make the decision difficult.”
Some Swiss pension funds reportedly reduced their exposure to US assets last year, including US Treasuries, amid growing concerns about US fiscal policy.
George Cipolloni, a fund manager at Penn Mutual Asset Management, told the Associated Press shortly after Trump announced the “Liberation Day” tariffs in April 2025 that investors were fleeing U.S. Treasuries out of fear that the United States was “losing its position as a safe haven.”
The U.S. bond market is the “largest and most stable in the world,” Cipolloni said, “but when you add instability, bad things can happen.” European countries hold about $8 trillion in U.S. bonds and stocks, Deutsche Bank said in a note on Sunday.
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Contra
Agathe Demarais, a political researcher at the European Council on Foreign Relations think tank, wrote on Tuesday that “there is no good reason for the EU to fear US tariff threats,” adding that tariffs imposed by the bloc “would amount to self-harm” as European consumers “would bear the brunt of such measures.”
Instead of imposing tariffs, he suggested the bloc should threaten to restrict market access to American social media platforms — Meta’s Facebook, Instagram and WhatsApp, as well as Elon Musk’s X — which are heavily dependent on the European market. The EU could benefit from not receiving any response, Demarais said, as the US Supreme Court could rule against Trump’s tariffs in the coming days.
Key background
Trump, who demanded US control of Greenland during his first presidency, has renewed his threats to seize the Danish territory. He has cited national security concerns, recently claiming that China and Russia have tried to control Greenland and arguing that Denmark can’t do anything about it.
Greenland Prime Minister Jens-Frederik Nielsen stated Tuesday that an invasion of Greenland cannot be ruled out, although he noted it would be unlikely. European Commission President Ursula von der Leyen said Europe’s response to Trump’s latest tariffs would be “unwavering, united and proportional,” adding to criticism from other European leaders, including Belgian Prime Minister Bart De Wever, who said Trump would “enslave” us unless the bloc took action.
This article was originally published in Forbes US
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