Germany says Trump reached red line with Greenland threat

‘We are constantly experiencing new provocations, we are constantly experiencing new antagonism, which President Trump is seeking, and here we Europeans must make it clear that the limit has been reached,’

US President Donald Trump reached a red line with his threat to hit NATO allies with additional tariffs for opposing his bid to annex Greenland, Germany’s finance chief said as he urged Europe to prepare its strongest trade countermeasure in response.

“We are constantly experiencing new provocations, we are constantly experiencing new antagonism, which President Trump is seeking, and here we Europeans must make it clear that the limit has been reached,” German Finance Minister Lars Klingbeil told reporters in Berlin Monday.

“There is a legally established European toolbox that can respond to economic blackmail with very sensitive measures, and we should now examine the use of these measures,” added Klingbeil, speaking alongside his French counterpart, Roland Lescure.

Klingbeil was responding to Trump’s announcement over the weekend to impose a 10% tariff on goods from eight European countries starting February 1, rising to 25% in June, unless there’s a deal for the “purchase of Greenland.” Trump levied the threat after the countries said they would undertake token NATO military planning exercises in the semi-autonomous Danish territory.

The announcement has focused minds in European capitals and EU leaders will hold an emergency meeting in Brussels later this week to explore possible retaliatory measures. European Council President Antonio Costa said in a social media post Sunday that the bloc’s nations were united in support of Denmark and Greenland and were ready “to defend ourselves against any form of coercion.”

The EU is discussing imposing tariffs on €93 billion ($108 billion) of US goods if Trump follows through on his threat. The EU has already approved the measures and they could be implemented quickly if needed, and the list of products would target American industrial goods including Boeing Co aircraft, US-made cars and bourbon.

European shares tumbled from a near-record high after Trump’s announcement, with the Stoxx Europe 600 Index falling 0.8% as of 9:24 a.m. in Paris. Sectors most exposed to the US market — including automakers and luxury stocks — took heavy losses.

If Trump follows through with the full 25% tariff threat, it could cut the targeted countries’ US exports by as much as 50%, with Germany, Sweden and Denmark the most exposed, according to Bloomberg Economics estimates.

Goldman Sachs Group economists estimate that a 10% US tariff would lower real GDP by 0.1% to 0.2% across the affected countries via reduced trade, with Germany getting the biggest hit.

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UK Prime Minister Keir Starmer blasted Trump’s comments as “completely wrong” and Sweden’s Ulf Kristersson said his country wouldn’t be “blackmailed.” French President Emmanuel Macron, who called the threat “unacceptable,” plans to request that the EU activate its most powerful trade retaliation tool, the so-called anti-coercion instrument.

The most immediate and tangible reaction from the EU was that it will halt approval of its July trade deal with the US, which still requires an endorsement from the European Parliament. The European People’s Party, the largest group in parliament, said it would join other parties in blocking ratification of the accord.

“President Trump has triggered an avalanche that threatens to destroy decades of transatlantic cooperation,” Stefan Lofven, president of the Party of European Socialists, said in a Sunday statement. The party, whose parliamentary group is the second largest in Brussels, supports suspending the trade agreement and called on the EU to examine using the anti-coercion instrument.

The trade deal, which many in Europe criticized as too lopsided in Washington’s favor, saw the EU agree to remove nearly all tariffs on American products. The EU also accepted a 15% duty on most exports to the US and 50% on steel and aluminum. The US has since expanded the list of goods included in the higher 50% rate to include hundreds of additional products that contain the metals.

“Limits have now been reached, and when I see the threat to Greenland’s integrity and sovereignty and to Denmark, I have noticed in negotiations that people expect us not to give in to blackmail and to take action against it,” Klingbeil said.

“For me, it must be clear at every moment that Europe must be ready to act, and this cannot be prepared at the last minute,” he added. “These preparations must be made now.”

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Macron’s threat to use the anti-coercion instrument would mark a massive escalation by the EU.

The ACI, which has never been used, was designed primarily as a deterrent, and if needed, to respond to deliberate coercive actions from third countries that use trade measures as a means to pressure the policy choices of the EU or its members.

Those measures could include tariffs, new taxes on tech companies or targeted curbs on investments in the EU. They could also involve limiting access to certain parts of the EU market or restricting firms from bidding for public contracts in Europe.

France’s Lescure urged the EU to consider using all its defense trade instruments, including the ACI.

“Blackmail between 250-year-old allies is not acceptable,” Lescure said. “We must react fast, and we must react well, in a significant way so that the kind of announcements of recent hours can remain announcements that aren’t followed by action.”

“We need to keep all instruments at our disposal,” he said.

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