European Union leaders are gearing up for a crunch week as they seek to defuse an escalating tariff conflict with the United States over Greenland, while also preparing a response should US President Donald Trump impose additional tariffs on six member states on February 1.
In a meeting in Brussels on Sunday, EU ambassadors called on their colleagues to give dialogue and diplomacy with the US administration a chance before resorting to retaliation. The EU executive also outlined the range of retaliatory tools available to the bloc.
One diplomat said that shuttle diplomacy this week could help convince Trump of a “miscommunication” regarding the scale of the recent European military deployment to Greenland and prompt him to climb down on his threats, a prospect also floated by leaders in Italy and the UK.
Over the weekend, Italian Prime Minister Giorgia Meloni said there “could have been a problem of understanding and communication” that caused Trump to target European countries including Denmark, France and Germany with additional tariffs.
The diplomat added that NATO Secretary General Mark Rutte could play a key role in convincing Trump of the non-menacing nature of the deployment, named Operation Arctic Endurance, confirming that Rutte will meet Trump on the sidelines of the World Economic Forum in Davos this week.
€93 billion in counter-tariffs set to kick in
If diplomacy fails, the EU could revive a €93-billion package of counter-tariffs targeting a hit list of US industrial and agricultural products, from yachts to soybeans.
The package was prepared last spring after Trump unveiled his sweeping “Liberation Day” tariffs on world nations, but suspended in July when the EU and US struck a trade deal at Trump’s Scottish golf course.
A Commission spokesman confirmed on Monday that the suspension of the package expires automatically on February 6, meaning that the counter-tariffs will kick in automatically on the following day unless the EU renews the suspension.
A diplomat described this as the “easiest option” as the EU simply needs to sit back and let the suspension expire.
Another option raised during Sunday’s meeting was the EU’s so-called “trade bazooka“, the Anti-Coercion Instrument (ACI), a device designed to punish unfriendly countries for “economic blackmail” by limiting trade licenses and shutting off access to the single market.
European Commission Vice-President Stéphane Séjourné said on Monday that Trump’s latest threats are a “textbook case of coercion”, while German Vice-Chancellor Lars Klingbeil said the EU needed to consider “sensitive measures”, seemingly pointing to the ACI.
But official and diplomatic sources in Brussels admit there is limited appetite for resorting to the bazooka now, cautioning that the instrument, which has never been used, could take time to deploy.
But another diplomatic source said that unlike when the ACI was first tabled last year, there would “likely” be the necessary qualified majority support among EU member states to trigger it against the US in the current circumstances, a clear signal of the gravity of the current escalation.
Several EU leaders are expected at the World Economic Forum in Davos later this week, with President Trump also in attendance.
The European Commission could not confirm on Monday whether President Ursula von der Leyen is expected to meet Trump in person at the event.
Commission officials meanwhile say they are keeping an eye on the US Supreme Court’s imminent ruling on the legality of Trump’s use of a 1977 law that allows the US president to invoke national emergencies in order to impose reciprocal tariffs on world nations.
During a hearing in early November, judges appeared to question the legality of the tariffs, bolstering hopes in Europe that the measures could be held back by the American justice system.