The European Union stands on the brink of a major transatlantic trade showdown as it contemplates retaliatory measures against United States President Donald Trump's aggressive threats over Greenland. 

Officials in European capitals are preparing a €93 billion (£78 billion) package of tariffs or market access restrictions targeting American companies, according to a report in the Financial Times.

This response aims to counter what one diplomat described as Trump's "pure mafioso methods" in pressuring NATO allies to cede control of the strategically vital Arctic island.

The escalation stems from Trump's vow on Saturday to impose escalating tariffs on eight nations—Denmark, Sweden, France, Germany, the Netherlands, Finland, Britain, and Norway—until the US secures ownership of Greenland.

These countries already face US tariffs of 10% to 15% and have contributed small contingents of military personnel to Danish-led exercises on the island, which Denmark insists are purely defensive and aimed at bolstering Arctic security.

European leaders view these US demands as a direct challenge to sovereignty and territorial integrity. Denmark's Prime Minister Mette Frederiksen emphasised on Sunday that her country seeks cooperation rather than conflict, stating, "We want to co-operate, and it is not we who are seeking conflict." The nations involved have reiterated their readiness for dialogue while firmly rejecting any infringement on Greenland's status.

In preparation for high-stakes encounters at the World Economic Forum in Davos this week, EU diplomats are drafting countermeasures to provide leverage. France's President Emmanuel Macron has championed the bloc's anti-coercion instrument, adopted in 2023 but never invoked.

This powerful tool permits the EU to retaliate against economic coercion—such as punitive tariffs—by denying access to its single market, imposing tariffs, or curtailing public procurement opportunities for offending firms.

Several EU member states back Macron's proposal, seeing it as a calibrated deterrent. However, a majority of diplomats advocate restraint, prioritising dialogue to de-escalate tensions. "We need to get the temperature down," one EU diplomat remarked, while another noted the availability of "clear retaliation instruments" should Trump persist, coupled with public calls for calm to allow him an off-ramp.

The 27 EU ambassadors convened on Sunday evening to deliberate the crisis, weighing immediate action against a more measured approach. Reuters reported late that evening that members have agreed to hold off on formal retaliation until 1 February—the date Trump specified for new tariffs on the eight countries.

This deadline offers a window for negotiations amid the Davos talks, where Ukraine's Defence Minister Rustem Umerov is also slated to discuss peace efforts with US counterparts.

Greenland's geopolitical significance underscores the stakes. The vast Danish territory, rich in rare earth minerals and strategically positioned amid melting Arctic ice, has long attracted US interest for military and resource purposes. Trump's renewed push revives his 2019 bid to purchase it outright, now framed through tariff threats amid broader NATO frictions.

For the EU, activating the anti-coercion instrument would mark a historic flex of economic muscle. It could encompass tariffs on US goods worth tens of billions, investment screening, or extraterritorial sanctions, tailored to match the perceived coercion. Yet invoking it risks a spiralling trade war, disrupting supply chains in sectors from aerospace to automobiles, where transatlantic ties run deep.

Trump's tactics have drawn sharp rebuke across Europe. The "mafioso" label reflects frustration with his pattern of blending security alliances with economic blackmail, including past steel and aluminium duties. NATO allies opposed to the Greenland gambit fear it signals a broader US pivot away from collective defence towards unilateral grabs.

Denmark has led the diplomatic pushback, coordinating with partners to affirm Greenland's autonomy. The military drills there, involving NATO contributors, focus on surveillance and resilience against hybrid threats, not provocation. European officials stress that these exercises predate Trump's latest salvo and pose no threat to US interests.

As Davos looms, EU leaders face a delicate balancing act: projecting unity without provoking outright rupture. Macron's activism contrasts with more cautious voices from Berlin and others, who prioritise alliance preservation amid global challenges like Russia's war in Ukraine and China's Arctic ambitions.

The 1 February tariff deadline looms large. If unmet, EU retaliation could activate swiftly, targeting iconic US exports from bourbon to tech hardware. Diplomats hint at phased implementation to incentivise de-escalation, blending stick with carrot.

This impasse tests the post-Brexit EU's cohesion, with Britain—facing tariffs despite its non-EU status—aligned closely with continental partners. Norwegian and Finnish officials, guarding their Arctic flanks, echo calls for sovereignty respect.

The Greenland row exposes fissures in the West's unity. While Trump frames it as a sovereignty swap for security, Europeans see coercion undermining the rules-based order they champion. Davos may yield breakthroughs—or harden battle lines for a trade confrontation of unprecedented scale.

Agencies