Will EU's Trade Deal with the US Be Delayed by Trump's Greenland Tariff Threats?

In light of US President Donald Trump's recent threats to impose tariffs on Denmark and other European nations regarding the sale of Greenland, the European Union has decided to pause the ratification process of the EU-US trade deal. This agreement, initially announced in July 2025, aimed to reduce tariffs on imports from the US into the EU to 0%. The situation raises significant concerns about trade relations and potential geopolitical ramifications for both the EU and the US.

Last updated: 29 October 2023 (BST)

What’s happening now

Currently, the EU is reconsidering its approach to the EU-US trade deal due to Trump's assertion that he will impose tariffs on several European countries unless they agree to discuss the sale of Greenland. This move has prompted a call for a pause in the ratification process, as EU officials assess the implications of Trump's threats on their economic relationship with the US. The European People's Party's Vice-President, Siegfried Muresan, emphasised the necessity of this pause in light of the recent developments, which could disrupt what was intended to be a stabilising agreement for transatlantic trade.

Key takeaways

• The EU has paused the ratification of the EU-US trade deal following Trump's tariff threats.
• Trump's proposed tariffs could escalate to 25% if an agreement regarding Greenland is not reached.
• The geopolitical situation has raised concerns about the stability of NATO amidst these tensions.

Timeline: how we got here

Understanding the current trade tensions necessitates a brief overview of the key events leading up to this situation:

• July 2025: The EU and US announce a bilateral trade agreement aimed at reducing tariffs for EU imports from the US to 0%.
• October 2023: Trump threatens tariffs on Denmark and other countries over Greenland, causing the EU to pause the ratification of the trade deal.
• February 2026: Trump plans to impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland.
• June 2026: The tariff is set to increase to 25% unless an agreement regarding Greenland is reached.

What’s new vs what’s known

New today/this week

Trump's recent announcement regarding potential tariffs is the latest escalation in a series of contentious statements about Greenland and US foreign policy. His insistence on acquiring Greenland underlines a shift in focus towards national security concerns, particularly in relation to perceived threats from China and Russia.

What was already established

Previously, the EU-US trade deal was seen as a significant step towards improving economic relations following years of tariffs and trade disputes. The aim was to create a more stable economic environment, allowing for smoother trade flows and increased cooperation between the two regions.

Impact for the UK

Consumers and households

The proposed tariffs could lead to increased prices for imported goods from the affected countries, potentially impacting UK consumers. A rise in tariffs may result in higher costs for many products, especially if the UK is seen as a trade partner in the EU framework.

Businesses and jobs

UK businesses that rely on exports to the US may face challenges if tariffs are enacted, potentially leading to a decrease in trade volumes and affecting job stability in sectors reliant on transatlantic trade. Additionally, uncertainty surrounding the deal could hinder investment decisions by UK firms.

Policy and regulation

The UK government will need to assess its position in relation to the EU and the US amid these developments. As a non-EU member, the UK might seek to navigate its own trade agreements while also considering the broader implications of the EU-US trade dynamic and Trump's tariffs.

Numbers that matter

• 0%: The intended tariff rate for imports from the US to the EU under the proposed trade deal.
• 10%: The proposed tariff on goods from Denmark and other countries starting February 2026.
• 25%: The potential tariff increase if no agreement is reached by June 2026.

Definitions and jargon buster

• Tariff: A tax imposed on imported goods, which can affect pricing and trade volumes.
• Bilateral agreement: A deal between two parties, in this case, the US and the EU, aimed at regulating trade and tariffs.
• EU: The European Union, a political and economic union of 27 member states located primarily in Europe.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, stakeholders in both the EU and the US will be closely monitoring the situation for any further statements from Trump and EU officials. Businesses should prepare for potential changes in trade conditions and adjust their strategies accordingly.

Medium term (1–6 months)

If the US and Denmark cannot reach an agreement regarding Greenland, the planned tariffs are expected to take effect, which may lead to increased costs for consumers and businesses alike. The EU may also seek to engage in further discussions to mitigate any negative impacts.

Signals to watch

• Statements from the US administration regarding tariffs and Greenland.
• Responses from EU leaders and any new proposals for the trade deal.
• Economic indicators related to trade volumes between the US and affected countries.

Practical guidance

Do

• Stay informed about developments regarding the trade deal and Trump’s tariff announcements.
• Consider potential price changes when purchasing imported goods.
• Evaluate supply chains and consider diversifying sources to mitigate risks.

Don’t

• Ignore the implications of tariffs on business operations and consumer prices.
• Assume that current trade relationships will remain unaffected; prepare for volatility.
• Underestimate the geopolitical context when planning business strategies.

Checklist

• Review your business's exposure to potential tariff impacts.
• Monitor news regarding the EU-US trade deal and Trump's statements.
• Consider alternative suppliers or markets if tariffs are implemented.
• Engage with trade bodies for guidance on navigating changes.
• Assess how changes might affect pricing strategies for consumers.

Risks, caveats, and uncertainties

There are significant risks associated with the current situation, including the potential for escalating trade tensions between the US and EU. The immediate future remains uncertain, as the reactions from both sides will dictate the stability of the trade landscape. Trump's unpredictable approach to foreign policy adds a layer of complexity, making it difficult to forecast the long-term implications of these tariffs and trade negotiations.

Bottom line

The pause in the ratification of the EU-US trade deal reflects the growing uncertainty surrounding international trade relations. UK businesses and consumers should be prepared for potential changes in pricing and availability of goods as the situation unfolds. Remaining adaptable and informed will be crucial during this period of heightened tension.

FAQs

What are the implications of Trump's tariffs on Denmark?

Trump's proposed tariffs could significantly increase the cost of goods imported from Denmark, which may lead to higher prices for consumers in the UK and elsewhere.

Why has the EU paused the trade deal ratification?

The pause is a response to Trump's threats regarding tariffs and the sale of Greenland, which undermine the stability that the trade deal sought to establish.

What is Greenland's significance in this context?

Greenland is viewed as strategically important due to its location and natural resources, which Trump claims are vital for US national security, prompting his interest in its acquisition.