The European Union Prepares to Impose Customs Duties Worth 93 Billion Euros on American Exports

SadaNews Economy - As geopolitical tensions rise between Washington and NATO countries, EU capitals are considering imposing customs duties on the United States worth 93 billion euros or restricting U.S. companies from accessing EU markets, in response to Donald Trump's threats to NATO allies opposing his campaign to annex Greenland. This step represents the most serious crisis in transatlantic relations in decades.

These retaliatory measures are being prepared to give European leaders leverage in pivotal meetings with the U.S. president at the World Economic Forum in Davos this week, according to officials involved in the preparations, as reported by the Financial Times.

The European Union is seeking to reach a compromise that avoids a deep rift in the Western military alliance, which would pose an existential threat to Europe’s security.

A list of customs duties was prepared last year but was put on hold until February 6 to avoid a comprehensive trade war. Ambassadors from the 27 EU countries discussed reactivating it on Sunday, alongside what is known as the ACI anti-coercion mechanism, which restricts U.S. companies' access to the internal market, amid debates on how to respond to the U.S. president's threat of punitive tariffs.

Trump, who demanded Denmark allow him to control Greenland, pledged on Saturday evening to impose a 10% tariff by February 1 on goods coming from the UK, Norway, and six EU countries that sent forces to the Arctic island for military maneuvers this week.

A European diplomat familiar with the discussions remarked, "There are clear retaliatory tools ready if this situation continues. Trump is using pure mafia tactics." He added, "At the same time, we publicly call for de-escalation and give him a chance to back down," saying, "The message is... temptation and intimidation."

In this context, France has urged the EU to respond using the investment screening mechanism, which has never been used since its adoption in 2023. This mechanism includes restrictions on investment and could limit service exports, such as those provided by major U.S. tech companies in the EU.

Additionally, a French finance ministry official stated that Paris and Berlin are coordinating a joint response, with the finance ministers of both countries set to meet in Berlin on Monday before heading to Brussels for a meeting with their European counterparts. The official added, "This issue will also be raised with all G7 partners during France’s presidency."

While other member states of the EU have expressed support for studying how to use the investment screening mechanism against the U.S., a majority of these countries have called for dialogue with Trump before issuing direct threats of retaliation, according to diplomats familiar with the discussions reported by the Financial Times.

Cancellation of Trade Agreement

In a step towards a response, the largest parties in the European Parliament announced over the weekend the postponement of a scheduled vote on measures that would have reduced the EU's customs duties on American goods under a trade agreement made last year.

Trump, who will attend the Swiss forum on Wednesday and Thursday, is scheduled to have private talks with European leaders, including European Commission President Ursula von der Leyen, in addition to participating in a broader discussion among Western nations supporting Ukraine.

Danish Prime Minister Mette Frederiksen stated, "We want to cooperate, and we are not the ones seeking conflict."

National security advisers from Western countries will meet in Davos on Monday afternoon. Initially, the talks were set to focus on Ukraine and ongoing peace talks to end the Russian invasion of the country, but they have been adjusted to allow time to discuss the Greenland crisis, according to two officials familiar with the preparations.

The Swiss Foreign Ministry, which is hosting the meeting, stated that it "will not comment on the participants or the topics discussed."

Security Measures

A third European official stated that Trump’s threats "definitely warrant a comprehensive security response, as they constitute explicit coercion."

He added, "But we must use the time left until February 1 to see if Trump is interested in backing down," indicating that much will depend on the outcomes of the Davos talks.

European officials expressed hope that their threats of retaliation would increase pressure from both parties in the United States against Trump's actions, leading to him retracting his pledge to impose tariffs.

A fourth European official stated, "The situation has reached a point where no compromises are possible, as we cannot hand over Greenland. Rational Americans also realize that he has just opened Pandora's box."

However, U.S. Treasury Secretary Scott Pessen stated on Sunday that Europe is too weak to guarantee the security of Greenland, and he refused to back down from the U.S. demand to control this strategically important island.

He told NBC News, "The president believes that strengthening security is not possible without Greenland being part of the United States."