Greenland tariff threats – assessing the EU and UK responses and considering the US legal basis

On 17 January 2026, the President of the United States publicly threatened to impose tariffs (up to 10 percent on February 1, rising to 25 per cent on June 1) on goods originating from eight European countries (Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland) in response to these countries’ opposition to US efforts to acquire Greenland. These tariffs would be added to the 10 percent and 15 percent “baseline” tariffs that already apply to the UK and EU, respectively. 

While trade policy is governed at EU level, there is no technical or legal reason why the US cannot impose tariffs on exporters from individual EU countries (six out of the eight countries that have been singled out).[1] Imposing blanket tariffs on only some EU member States may be complex but feasible given that products can be singled out according to their country of origin, based on importer declaration (as is common practice for the imposition of trade remedies). However, the highly integrated nature of EU supply chains complicates such an approach, as production and value creation often span multiple member States. Furthermore, as set out below, retaliation in response to any additional tariffs would be coordinated and implemented at EU level, not by individual countries. This situation is expected to continue evolving day to day as the US President heads to Davos this evening.

1. EU Response

The EU has already signalled that it will act collectively and is drawing up plans for the two retaliatory tools in its arsenal: the EU’s Enforcement Regulation and the Anti-Coercion Instrument (the ACI), in addition to scrapping the Turnberry Framework Agreement agreed with the United States in August 2025.

EU Enforcement Regulation

The EU Enforcement Regulation was established to enable the EU to respond quickly to so-called “safeguard” measures (which under WTO and EU law are a type of import restriction to protect domestic industry). When the first Trump administration imposed global steel and aluminium tariffs, the EU invoked this regulation to impose “rebalancing” tariffs. 

But there is a twist for measures taken on this legal basis. As during the first Trump administration, the United States is framing the additional tariffs as a national security measure rather than as a safeguard action. This might raise issues regarding the legal basis of the EU’s countermeasures under international trade rules. Nevertheless, there is little indication that this concern is shaping the EU’s approach.

Last year, amid Trump’s threats and “liberation day” tariffs, the EU prepared a EUR 93-billion package in response based on the EU Enforcement Regulation. The package was shelved when the EU-US trade Turnberry deal was agreed between the parties’ leaders, but the suspension was time-limited. The default is that the tariffs will reactivate on February 7, 2026, unless a majority of the EU’s member States agree to delay them again. In light of the tariff threat, the EU is now considering reactivation.

The EU package includes 25 per cent tariffs on American aeroplanes as well as other tariffs on iconic US products such as Harley-Davidson motorcycles, Levi jeans and Lucky Strike cigarettes. Machinery, medical devices, chemicals and plastics and electrical equipment will also be hit. These products were selected in a way that would minimise potential harm to the EU economy but exert political pressure in the United States.

Anti-Coercion Instrument

The ACI was adopted to equip the EU with the ability to respond swiftly to economic coercion exercised by third countries against the EU or its member States. Its purpose is precisely to deter coercion in an age of “increased weaponisation of trade”. The EU has so far never activated it, although it was threatened as a response to mooted Trump tariffs just under one year ago. 

French President Emmanuel Macron signalled on Sunday that France will formally request the activation of the Anti‑Coercion Instrument. Germany appears to be supportive of this approach, based on statements from the German Finance Minister and the BDI.

The ACI defines “coercion” as an attempt to pressure the EU or a member State into making a particular choice by applying, or threatening to apply, measures affecting trade or investment. The current tariff threats would fit within that scope. The final decision to active the ACI rests with the EU Council, where the 27 EU member States have to vote in favour by qualified majority vote (a process which can slow down decision-making).

Where coercion is established, the ACI authorises the EU to adopt “rebalancing” measures. The menu of rebalancing measures which the EU may choose to adopt includes:

• Goods: imposing duties and other charges, as well as other restrictions on imports and exports;
• Services: imposing restrictions on trade in services, which includes limiting the rights of investors in services (including financial services);
• Intellectual property: withdrawing IP protection or commercial exploitation;
• Government procurement: restricting the award of government contracts; and
• Foreign investment: withdrawing foreign investment protection. 

The ACI contains a detailed set of procedures that need to be followed before the EU is able to react. The ACI’s procedures contemplate a period of 10 months but it is likely that political will could lead to agreement in a much shorter period. 

If there is sufficient political support, the EU will have a large range of options for retaliation, which could in principle include freezing US companies from procurement contracts, additional tariffs, and even taxing or otherwise restricting US services. However, these options were not part of the initial discussions surrounding the first wave tariff threats and retaliation. The ACI requires consideration of the impact on the EU itself, and many of the more extreme options technically open would likely be ruled out for this reason, and the simple fact of the impact on the EU and its economy.  This would still, though, likely leave a wide range of options that could be contemplated.

EU–US trade deal

On 21 August 2025 the US and the EU agreed on a Framework on Reciprocal, Fair and Balanced Trade (the Turnberry agreement). Under this agreement, the US agreed to cap tariffs on most imports from the EU at 15 percent, representing so called “reciprocal tariffs” designed to match or counter the perceived imbalance trade flows between the two parties. The Turnberry agreement also provided for tariff exemptions for certain key sectors, ensuring they are subject only to the WTO-agreed MFN tariff (often near zero). In turn, the EU committed to remove its remaining tariffs on US industrial goods and to expand market access for specific American agricultural products (excluding beef and poultry), and to increase procurement of US energy and AI chips.  

The Turnberry agreement was presented by US and EU leaders as an essential first step, aimed at providing clarity for businesses while acknowledging the groundwork still required for sustained economic growth. It demonstrated the EU’s willingness to address the US’s concerns and its commitment to reaching a swift outcome to quickly stabilise trade relations. The agreement, however, needs to be ratified by the European Parliament to be fully effective.

The tariff threats received over the weekend in connection with the US demands regarding Greenland have effectively suspended the agreement. The leaders of the main parties in the European Parliament confirmed that they will not move forward with ratification of the agreement.

2. UK Response

Compared with the EU, the UK has adopted a more restrained response. UK prime minister Keir Starmer has said that the UK is “not at the stage” of contemplating counter-tariffs, warning that escalating the dispute would be damaging. 

While the prime minister also confirmed that he held talks with the EU Commission’s president and planned further coordination with EU officials, he hinted that the EU and UK’s response may not be the same. Similarly to the EU, the UK had negotiated a bilateral trade deal under which the US capped “reciprocal” tariffs on imports from the UK at 10 percent in return for UK commitments on market access for agricultural products, and regulatory cooperation on non-tariff barriers, among others. As with the EU’s Turnberry deal, the deal was not a comprehensive treaty signed and ratified by both countries’ legislatures and its survival depends on political alignment between the two countries, so its existence no longer guarantees tariff stability.

3. US Supreme Court Tariff Ruling 

Another factor to bear in mind is the potential impact of an adverse US Supreme Court ruling on the IEEPA tariffs, with judgment expected imminently. This has a direct bearing on the Greenland tariffs, which will almost certainly be based on IEEPA. 

One of the core legal questions is whether the power to ‘regulate … importation or exportation of … any property in which any foreign country or a national has an interest’ excludes the use of tariffs. On its face, the power to regulate importation or exportation should include the use of tariffs to this end. But Congress has no power to impose export tariffs – this is a matter for the States. Hence, it was argued, what goes for export tariffs goes for import tariffs. 

It is presently unknown whether IEEPA tariffs will all be struck down, or if more geopolitical tariffs might survive – thus permitting the Greenland tariffs - or indeed whether all IEEPA tariffs survive. 

In addition, if the Court rules that the broad tariffs are unsupported by IEEPA (whether this is because all tariffs are unsupported or even leaving Greenland tariffs in place), the basis for the EU and UK ‘deals’ falls away. The only reason these were concluded was to ward off the threat of the broader tariffs, at higher rates. If that threat disappears, so does the incentive to formalise and maintain these deals. Indeed, one of the reasons the European Parliament has taken so long to approve the EU-US deal is reportedly so that it can await the outcome of the Supreme Court ruling. In short, even if Greenland is resolved, there is soon likely to be a change in EU and UK trade relations in any event.