• US Treasury Secretary Scott Bessent cautions that European retaliation to Trump's tariff threats would be unwise, emphasizing US economic leverage to prevent conflict.
  • The EU opts for diplomatic dialogue over immediate action, holding off on deploying the Anti-Coercion Instrument or reinstating €93 billion in suspended tariffs.
  • Transatlantic tensions escalate, freezing a recent EU-US trade deal and raising questions about future cooperation on security issues like Ukraine.

US Treasury Secretary Scott Bessent has issued a stark warning to European nations, arguing that any retaliation against President Donald Trump's tariff threats over Greenland would be "very unwise." According to people familiar with the matter, Bessent framed the US administration's use of economic leverage as a tool to avert broader conflict, stating that "Europeans project weakness. US projects strength." This comes as Trump has threatened to impose an additional 10% tariff on eight European countries—Denmark, Germany, France, the Netherlands, Finland, Sweden, Norway, and the UK—starting February 1, 2026, escalating to 25% by June unless Greenland is sold to the United States.

In response, the EU has chosen diplomacy over immediate retaliation, despite having powerful tools at its disposal. During an emergency meeting of EU ambassadors in Brussels, member states decided against deploying the Anti-Coercion Instrument (ACI)—a never-before-used "economic bazooka" adopted in 2023—or immediately reinstating €93 billion in suspended retaliatory tariffs. An EU diplomat noted, "At present, there is no question of deploying the ACI or any other trade instrument against the US." However, if Trump follows through with tariffs on February 1, the EU could revive the €93 billion retaliation package, which would include levies of up to 30% on US products ranging from cars to poultry.

Efforts to restructure transatlantic trade relations have hit a snag, with Trump's tariff threats effectively freezing the EU-US trade deal agreed last year, which had established a 15% baseline tariff on most EU products. The leaders of all three centrist political groups in the European Parliament have announced they will halt ratification of the deal until Trump changes course. Brando Benifei, head of the European Parliament's EU-US delegation, described ties as under "extreme tension" and raised questions about "the future of Europe." This situation complicates EU efforts to convince Trump to support Ukraine, as the trade deal was initially presented as necessary to maintain transatlantic cooperation on security issues.

European leaders' reactions have been firm across the political spectrum. France's President Emmanuel Macron called for activating the anti-coercion instrument, while Italy's Prime Minister Giorgia Meloni—typically aligned with Trump—called the threatened tariffs a "mistake." Denmark's Foreign Minister announced plans to discuss Arctic security policy with other NATO allies. Bessent, beyond his warning, characterized Greenland's acquisition as a geopolitical necessity, stating, "We are the strongest country in the world." He expressed confidence that European leaders would eventually "come around" to accepting US control of Greenland, arguing it would be "best for Greenland, best for Europe, and best for the United States."

Looking ahead, key deadlines loom: February 1, 2026, marks the potential implementation of the initial 10% tariffs, with escalation to 25% by June 1, 2026. The EU faces a February 6, 2026, deadline to decide whether to extend the suspension of its €93 billion retaliation package. This week, EU leaders are gathering in Brussels for an emergency summit, while the World Economic Forum in Davos will host discussions among global leaders, adding urgency to the ongoing negotiations. Attempts to reach out to the US Treasury for further comment were unsuccessful at press time.