A US seizure of Greenland could damage trade ties with the European Union, France’s finance minister has warned, with one expert telling CNBC that tariffs or economic sanctions could lead to a “trade war”.
US President Donald Trump intensified the conversation about it Annexation of Greenland this month — and did not rule out taking it by force. Talks between the US, Denmark and Greenland over the future of the world’s largest island ended without a diplomatic breakthrough on Wednesday.
French Minister of Finance Roland Lescourt reported the Financial Times On Friday, Trump said that economic ties between the United States and Europe could be damaged if he moves to annex Denmark’s self-governing territory.
“Greenland is a sovereign part of a sovereign country that is part of the EU. You should not mess with him (me),” he said.
Asked whether the EU would impose economic sanctions on the US if Greenland were to be invaded, Lescourt told the FT: “I’m not going to go there. I mean, if that happened, we would obviously be in a whole new world and we would have to adapt accordingly.”
His announcement comes as a US delegation led by the Democratic Party is expected to arrive in Copenhagen on Friday for talks with Danish lawmakers.
Trump said the US needs Greenland for national security purposes. This was reported by experts to CNBC it wants to keep competitors out of developing trade routes and, perhaps, from extracting minerals that are important in areas such as defense.
“Significant” U.S. economic pressure against Denmark, in the form of tariffs or sanctions, “could have a significant EU backlash, where the EU could respond in kind, leading to some kind of trade war with the U.S., as well as persistent risks,” Dan Alamariou, chief geopolitical strategist at Alpine Macro, told CNBC in an email.
“It’s going to shake up the markets,” he said. “It also casts doubt on NATO, although we do not foresee this situation or the collapse of NATO. Domestic political and market pushback could mitigate any such push by the Trump administration.”
Meanwhile, European troops arrived in Greenland on Thursday evening for a joint military exercise.
It shows the U.S. that “this is primarily an allied effort,” Maria Martisiute, a policy analyst at the European Policy Center, told CNBC.Squawk Box Europe“If we want to build up veterans and defenses in Greenland or the wider Arctic, that’s not up to the US, it can be done through allied efforts.”
The exercise could “send a strong message” to European leaders by setting non-negotiable red lines, he said, adding: “It remains to be seen how the US will react to this.”
The EU’s executive body, the European Commission, proposed doubling spending on Greenland in its latest draft budget.
“It is clear that Greenland can count on us politically, economically and financially, and in terms of its security,” European Commission President Ursula von der Leyen said on Thursday.