In a dramatic move, the European Parliament has formally suspended the ratification process of a major trade deal with the United States. This decisive action comes in response to Donald Trump’s threat to impose a 10% tariff on EU exports unless the bloc agrees to let him take control of Greenland.
The pause in the trade deal ratification is seen as the EU’s strongest material response yet to what several leaders last week described as “blackmail” from the US president. Bernd Lange, the head of the European Parliament’s trade committee, made it clear that “until the threats [on Greenland] are over, there will be no possibility for compromise” on the US trade agreement, which had promised American businesses a new era of 0% tariffs on many industrial exports.
Significantly, the EU’s promise to buy $750 billion (£560 billion) worth of energy from the US will not be affected by this decision, as it was separate from the tariff deal.
The escalating transatlantic tensions have prompted European Commission President Ursula von der Leyen to cut short her trip to Davos and return to Brussels to prepare for an emergency summit on Thursday evening. At the meeting, EU leaders will discuss a range of options, including the “nuclear deterrent” of slapping €93 billion (£81 billion) worth of retaliatory tariffs on US exports and activating a never-before-used anti-coercion instrument.
This anti-coercion tool, originally designed to limit China’s pressure on individual member states, would allow the EU to restrict US businesses from accessing the European market. In theory, the EU could target anything from US tech and crypto companies to aircraft manufacturers or agricultural goods. However, European consumers may balk at the extra costs or restrictions on US firms like Apple or Netflix.
While the EU says it continues to work towards diplomatic solutions to avert a trade war, Lange acknowledged that “a lot could happen” between now and 2 February, when Trump’s tariff threats are due to materialise. “There are always day-by-day surprises coming from the White House,” he warned.
The EU’s attempts to diversify its trade partnerships have also suffered a setback, as the European Parliament voted by a slim majority of just 10 to refer the Mercosur trade deal with Latin American countries to the European Court of Justice. This decision was condemned by Lange and the European Commission, who called it “regrettable”, a sentiment echoed by German Chancellor Friedrich Merz, whose country’s car manufacturers had denounced the move.
While a trade war with the US would be highly damaging, the EU now finds itself navigating a complex web of international disputes, with the threat of escalating tensions and economic consequences looming large.
