EU Suspends US Trade Deal After Trump’s Greenland Tariff Threats
- EU Parliament halts US trade deal approval after Trump revives tariff threats.
- Trump backs down on tariffs after announcing a Greenland framework deal with NATO.
- EU keeps retaliation options open as uncertainty lifts gold and silver amid trade tensions.
The European Union has suspended approval of a major US trade deal after renewed tensions linked to President Donald Trump’s Greenland demands. The European Parliament announced the decision in Strasbourg on Wednesday as Trump addressed the World Economic Forum in Davos.
Lawmakers said the suspension followed threats of new US tariffs and escalating political pressure over Greenland’s future. Financial markets reacted quickly, with investors shifting toward safe assets such as gold and silver amid trade war concerns.
Trade deal put on hold
The suspended agreement dates back to July, when US and EU officials reached a compromise in Scotland. That deal lowered US tariffs on most European goods to 15% from a threatened 30% level.
In return, European states agreed to invest more in the US and adjust rules to boost American exports. However, the agreement still required approval from the European Parliament before becoming law.
On Wednesday, Bernd Lange said lawmakers had no choice but to halt work on the proposals. Lange chairs the European Parliament’s International Trade Committee and led the decision. He said cooperation had stalled after Trump revived tariff threats linked to Greenland.
He added that progress would remain frozen until the US returned to dialogue. Lange said lawmakers would not advance legislation during what he described as confrontational tactics.
The move reopened the possibility of EU retaliation against US goods. The bloc had prepared tariffs covering up to €93 billion worth of American imports last year. Officials paused those measures while talks over the July agreement continued.
Under current rules, those tariffs could take effect on February 7. The EU must either extend the pause or approve the suspended deal before then. Lange also raised the possible use of the EU’s anti-coercion instrument. Officials often describe the tool as a “trade bazooka” for economic retaliation.
Trump backs down on tariffs
Hours after the EU decision, Trump announced a shift in his position. He said he had reached a “framework” agreement on Greenland’s future. Trump made the announcement on Truth Social after meeting NATO Secretary General Mark Rutte.
He said the understanding covered Greenland and the wider Arctic region. Trump added that he would cancel tariffs planned for early February. He had earlier warned of tariffs as high as 35% on some countries.
Those threats followed his renewed push to gain control over Greenland. Trump has said the territory holds strategic value for US and global security. At Davos, he said he would not use force to acquire the island. Instead, he called for immediate negotiations with Denmark and Greenland’s authorities.
Despite the announcement, uncertainty remains in Brussels. Trump offered few details on what the framework agreement would include. He later described it as a “concept of a deal” during a television interview.
Related: Trump’s Greenland Push Draws Early Bets in Crypto Markets
European lawmakers did not immediately confirm any change to their position. It also remains unclear which parts of the trade deal lawmakers have blocked. Some elements of the July agreement already remain in force.
EU officials said they need time to assess the implications of Trump’s statement. Lange told the BBC that understanding the proposal would take time. He declined to say whether the deal could move forward soon.
In Brussels, officials expressed skepticism over Trump’s reversal. Some pointed to a pattern of threats followed by retreats. Market participants have coined the term “TACO” to describe that trend.
The latest episode again unsettled markets and lifted demand for gold and silver. Investors often favor precious metals during political and trade uncertainty. For now, the EU trade deal remains frozen as both sides reassess next steps.
