In a striking declaration aimed at calming diplomatic waters, US Treasury Secretary Scott Bessent has asserted that America's relationship with Europe remains robust, even as a fresh crisis over Greenland threatens to unleash a transatlantic trade war.
Davos Call for Calm Amid Rising Tensions
Speaking on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland, on Tuesday 20 January 2026, Bessent urged trading partners to "take a deep breath" and allow the situation to develop. His comments come just days after former President Donald Trump announced a significant new trade measure.
"I think our relations have never been closer," Bessent stated, seeking to downplay the immediate friction. This reassurance follows Trump's announcement on Saturday of a 10% import tax, set to begin in February, targeting goods from eight European nations.
The Root of the Crisis: Security and Sovereignty
The controversial tariffs are a direct response to those nations rallying around Denmark after Trump renewed calls for the United States to take over the semi-autonomous territory of Greenland. Trump has consistently framed the potential acquisition as a vital security necessity to counter perceived threats from China and Russia in the Arctic region.
This move has not been met quietly in European capitals. The announcement has sparked outrage and a flurry of diplomatic activity across the continent, with leaders urgently debating a coordinated response.
Europe's Arsenal of Potential Retaliations
The European Union is now actively considering its options, which represent some of the most powerful economic tools at its disposal. Possible countermeasures under discussion include:
- Imposing retaliatory tariffs on US goods.
- Suspending aspects of the existing US-EU trade deal.
- Deploying the bloc's so-called "trade bazooka" – the official Anti-Coercion Instrument (ACI).
The ACI is a particularly potent weapon, designed to sanction foreign individuals, institutions, or countries found to be applying undue economic pressure on the EU or its member states. Its use in this context would be a historic first, marking a major escalation in the dispute.
Despite the looming threat of these measures, Bessent's message from Davos was one of strategic patience, suggesting a belief that the immediate storm will pass without causing lasting damage to the core transatlantic alliance.
