Donald Trump’s threat to impose punitive US import tariffs on eight European countries opposed to his ambitions in Greenland has raised fears of a full-blown transatlantic trade war. The move revives global trade war fears, with Europe potentially using a powerful but untested law to retaliate.
Markets have remained calm amid Trump’s gambit, but long-term risks are huge. The tariffs target nations that have resisted US pressure over Greenland, escalating tensions between the US and its European allies.
Europe could hit back with a so-called ‘trade bazooka’, a legal instrument designed to counter economic coercion. However, such retaliation could also harm European economies, as a trade war would likely lead to losses on both sides.
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