Geopolitical tensions have escalated following President Trump’s renewed intent to acquire Greenland and threats to impose tariffs of 10%—rising to 25% in June—on countries that oppose the move. Talks between U.S. and Danish officials last week made no progress. In response, several European countries—including Germany, the Netherlands, Norway, the UK, and France—have deployed troops to Greenland as part of a symbolic multinational show of support for Denmark.
The facts
Under a 1951 defence agreement, the United States already has extensive rights to operate military bases in Greenland, including control over air and maritime movements. During the Cold War, the U.S. operated 17 bases before consolidating to one. A 2004 amendment, signed by then–Secretary of State Colin Powell, explicitly recognizes Greenland as an equal part of the Kingdom of Denmark. Despite this, U.S. troop levels in Greenland have declined in recent years.
Reaction
Denmark’s response has shifted from surprise to defiance. As a committed NATO ally that has suffered proportionally higher casualties in Afghanistan than the U.S., Copenhagen views the pressure as unacceptable. Greenlanders share this stance: Polls suggest 85%1 oppose joining the U.S., citing reduced autonomy, weaker social protections, and loss of control over natural resources. Only 17%2 of Americans support acquiring Greenland.
There is no pressure from EU partners for Denmark to compromise. Prime Minister Frederiksen is well regarded in Brussels, and EU leaders view a U.S. military seizure as unlikely and self-defeating. Even in that scenario, officials believe NATO could endure, as Europe may not relinquish U.S. nuclear deterrence.
EU response and risks
A forced U.S. takeover could likely trigger EU countermeasures, including sanctions, use of the Anti-Coercion Instrument, digital taxes on U.S. firms, and suspension of progress on a U.S.–EU trade deal. Danish lawmakers are already urging delays to proposed tariff reductions. Such a crisis could accelerate European defence autonomy and reinforce existing plans.
EU officials also see little risk of a U.S. withdrawal from NATO or Ukraine, given that U.S. defence contractors benefit directly from higher European defence spending.
The EU’s three-point approach
Economic development: Expanded fishing access, infrastructure upgrades, and €94 million for education, skills, and clean energy. The EU has committed €225 million to Greenland in the current budget and plans to increase this to €530 million.
Security: NATO’s “Arctic-7” framework calls for enhanced surveillance, space activity, and military operations. European troop deployments were announced in mid-January by France, Germany, Sweden, and Denmark, with France also contributing naval and air assets. These moves signal resolve and raise the cost of any unilateral U.S. action.
Contingency planning: Quiet preparations are underway for a potential “hostile takeover,” alongside coordinated diplomatic outreach ahead of Davos and the Munich Security Conference. The EU Mutual Defence Clause (Article 42.7) obliges collective assistance in the event of armed attack.
Broader geopolitical and economic implications
The dispute benefits Moscow and Beijing. Russia sees an opportunity to fracture transatlantic unity, while China is capitalising on signs of Western disarray. Canada has renewed high-level engagement with China, and the EU’s newly concluded Mercosur trade deal would place the U.S. at a relative tariff disadvantage, possibly encouraging a thaw in EU-China relations.
Economic fallout would be significant but uneven (UN Comtrade, 2024)
The UK is most exposed in terms of goods exports to the US (16.9%.), followed by Germany (10%), Sweden (9%), France (7.9%), Finland (9.3%) the Netherlands (5%), Denmark (5.4%%), and Norway (estimate pending) For the U.S., the EU accounts for 19% of exports, mainly energy and machinery3. Defence supply chains are deeply intertwined—18% of the F-35 is European-made.
Energy is central, as it is the largest goods export. U.S. LNG exports to Europe surged after Russia’s invasion of Ukraine, but Europe’s electrification drive is expected to cut LNG imports by 20% by 20304, and 18% by 2035, reducing long-term demand for U.S. supply.
The strategic contrast in the background is stark: Washington is promoting fossil fuels, while Beijing offers scalable clean-energy infrastructure—solar, wind, batteries, grids, EVs, and drones—at falling costs.
Outlook
While de-escalation remains possible, any U.S. tariffs on EU members would prompt reciprocal action. The EU stands ready to deploy its Anti-Coercion Instrument—ironically designed with China in mind—against the United States. It would probably focus on constraining the US’s access to the single market, involve tariffs on service exports and impose digital taxes on US tech companies. That would poison relations for the rest of this administration and almost certainly undo the US-EU trade deal, prompting tariff escalation from both sides. The European Commission’s commitment to unilaterally lower tariffs on US goods exports has been enshrined in a legislative proposal that is awaiting approval by the European Parliament.
At this point, approval seems unlikely, at least until the US’s intentions toward Greenland become clear. Any attempt to acquire Greenland by the US would turbocharge the idea that Europe needs to do more for its own defence, accelerating and likely expanding existing plans. Meanwhile the US defence sector would struggle to unpick its supplier relationships.
3 Source for exports to the US: UN COMTRADE goods exports and national statistics where available. Also specific countries economic agencies. As of year 2024.
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