Trump’s Greenland tariffs

President Trump’s announcement that he will levy tariffs on the eight countries (the UK, Denmark, Norway, Finland, Germany, France, Sweden, and the Netherlands) that have sent military forces to Greenland is causing substantial reverberations. He is threatening 10% tariffs from the beginning of February, ramping this up to 25% from the beginning of June, if there has not been agreement for the US to purchase Greenland. Economically, these actions are significant. For the US, in 2024, nearly 11% of imports came from these countries, and nearly 15% of US exports went to these countries. For the UK, for example, the share of the US in UK imports and exports is a little over 10%. If the tariffs come into place, they will have negative consequences on all the countries concerned, the US included, especially on the firms and sectors for which trade with the US is significant.

Adjectives to describe the announcement abound – ‘unprecedented’, ‘unacceptable’, a ‘mistake’, a ’parody’, ‘blackmail’, to name a few. It is easy, and too often the media can be overly hyperbolic in reaction to events. However, in this case, the proposed tariffs are indeed worrying, and potentially deeply worrying.

There are three ways in which the ‘Greenland tariffs’ are different from the swathes of ‘reciprocal tariffs’ introduced and negotiated, over the course of the last year. First, with the reciprocal tariffs, Trump sought lower imports into the US and bilateral concessions from countries - notably increased investment, lower tariffs on US exports, and adherence to the US framing of national security considerations. These were issues which countries could (rightly or wrongly) negotiate over – and to date, 17 countries have agreements with the US (though note almost all of these are not legally binding, and the agreements are more in the form of an understanding). This is not the case with the Greenland tariffs. What Trump wants is ownership of Greenland.

Secondly, the tariffs are different because the US administration is targeting eight countries which are historically and, notionally at least, still NATO allies of the US. By specifically threatening these countries, the US is even further undermining if not risking the collapse of the NATO alliance. Third, and given the preceding, it is very hard to see how the affected countries can acquiesce to the US demands. While the targeted countries could offer the US that they would not support Denmark and Greenland in this crisis – that seems inconceivable. Hence, in one form or another, it seems very likely that the targeted countries will oppose the US action in some way (see below). To date, with the reciprocal tariffs, they have not.

So, what are the likely or possible responses

In the immediate short term, there will be intense diplomatic activity attempting to defuse the situation and to encourage the US administration to change course. With the World Economic Forum later this week, this provides some opportunity for those discussions. If the US refuses to back down on the 10% tariffs, then I would expect (and hope) that, at a minimum, de facto the UK suspends negotiations over the existing agreements with the US, and the EU parliament pauses approval. On the UK side, this refers to both the Economic Prosperity Deal agreed in May 2025, and the Tech Prosperity Deal agreed in September; on the EU side, this refers to the Turnberry Agreement of July 2025. Note, and importantly, the US Supreme Court is about to rule on the legality of Trumps reciprocal tariff actions. If the court rules that these are illegal under the US International Emergency Economic Powers Act (IEEPA) legislation, then this would be a major blow to Trump. It is more likely that those countries that have signed agreements may reassess whether or not they wish to withdraw or renegotiate.

In the more medium term, if the 25% tariffs are introduced in July, this would be much more significant economically, for both the US and the affected countries. Jamieson Greer has suggested that the issues of the Greenland Tariffs and the reciprocal tariffs be siloed and treated separately. I think this is unlikely, and it is much more likely that the EU will consider retaliatory action – in the form of tariffs and possibly restrictions on US services providers. It is less clear what the position of the UK will be. It will be hard to resist the domestic and international pressure to retaliate, but as Prime Minister Starmer indicated at the press conference this morning, the UK is heavily dependent on the US for “defence, security, intelligence, and nuclear capability” and that is an ongoing concern.

The US actions have only served to starkly underline the unilateralism of Trump and the uncertainty that brings. This should encourage other countries to work much more closely together, both in response to US actions, but also in strengthening ties with each other. It may even facilitate a closer UK-EU reset.

In the longer term and building on the preceding point – the transactional and unilateral approach of the US effectively means that - in terms of the international economic order as we have (more or less) known it for the past decades, the US is pretty much a rogue state. This seems to increasingly be part of the play book. In the face of that, businesses will need and already are considering what form of relationship they want with the US, and (some) other countries are more likely to deepen cooperation between themselves on grounds of both prosperity and economic security. It won’t be easy, though.

The stated motivation for the US actions is ‘national security’ in the face of both China and Russia wishing to seize control of Greenland. Without commenting on the likelihood of such a threat, two additional points are worth making. First, if there really is such a risk, then a more advisable action would be to work closely with allies. Instead, the US administration is acting antagonistically towards those very allies. Second, there is a curious disjunct between being concerned about Russia with respect to Greenland, yet so acquiescent when it comes to Ukraine.

Finally, is it likely that Trump will go ahead with these tariffs, or will they prove to be another TACO (Trump Always Chickens Out) moment? It is hard to tell because he has not left himself much ground for backing down. But this has not stopped him before, and we will also need to see how the financial markets react. My gut feeling is that there will be a backing down and moves to some form of diplomatic resolution. But it could easily not happen. Either way, the Greenland Tariffs have not so much as shone a new light on the US administration, but thrown into stark relief how far it is prepared to go in the pursuit of unilateralism – and that is much further than most people had thought. That is deeply worrying.