Division in Davos: EU warns tariffs could hit US ‘very quickly’

The EU has warned that its retaliatory tariffs could be implemented “very quickly” after President Trump doubled down on his desire to annex Greenland. 

The EU’s economic commissioner Valdis Dombrovskis, said the EU was prepared to respond to US tariff threats, dialling up the risk of an extraordinary clash between the world’s largest economy and largest economic bloc. 

He told the Financial Times in Davos that nations were still working to find a “constructive solution” but that counter-tariffs could be applied “very quickly”. 

In an event on Wednesday morning, Nato secretary general Mark Rutte attempted to assure business chiefs and strategists that he was helping to ease tensions between the US and the EU “behind the scenes”. 

He also said global powers were “dropping the ball” on threats from Russia and support for Ukraine amidst rising tensions around Greenland’s sovereignty. 

But on Tuesday night, Trump held firm on his stated ambition to take over Greenland, which is an autonomous territory in the Kingdom of Denmark. 

He warned that European leaders would “have to find out” to see how far he would be willing to go, keeping the possibility of military action open. 

The US president also emphasised there was “no going back” on his plan to take over Greenland, later adding that Nato countries would be “very happy” with proposed solutions. 

“I know we’ll come to [Nato’s] rescue, but I just really do question whether or not they’ll come to ours,” he also said. 

Davos rifts brew

Tuesday’s events at the World Economic Forum conference featured policymakers clashing on stage in various Davos panel events and political leaders challenging US allies to stand up to Trump. 

French president Emmanuel Macron accused Trump of “bullying” and warned of a shift to a “world without rules”. 

Canadian prime minister Mark Carney, formerly the governor of the Bank of England and known for his support in multilateral organisations, said the rules-based international order was suffering from a “rupture, not a transition”. 

“Middle powers must act together because if we’re not at the table, we’re on the menu,” Carney said in his Davos speech.

“Nostalgia is not a strategy. But we believe that from the fracture we can build something bigger, better, stronger, more just.”

Chancellor Rachel Reeves also confronted US commerce secretary Howard Lutnick during a panel after the Trump administration official said a deal with the EU on tariffs would “sort its way out” despite threats over Greenland.  

Reeves said the US remained highly dependent on China for some rare earth materials and that it needed to keep its European allies on side to reduce its reliance on the country. 

She also told Lutnick: “You are a much bigger economy, and we can’t do everything on our own, nor should we try to, because we’d end up doing nothing well. 

“Even a country as big and as strong as America also relies on its allies, and… the area where I think that we do need to sort of continue that dialogue between countries that share each others’ values, is how we can work together in our mutual interests to advance our values in a very unstable and uncertain world?”