The Cold War satirical novel The Mouse That Roared imagined a tiny European statelet declaring war on the US in the hopes of being lavished with US aid after its inevitable defeat. It is a title that came immediately to mind when European nations sent three dozen soldiers to Greenland in response to US President Donald Trump’s threats to wrest the island from Danish control. The idea seems to have been: Support Denmark, yes, but do not antagonize the White House when Ukrainian security is also on the line.
Whatever the intent, it has not worked. Trump’s contemptuous delight in beating up US allies was given free rein over the weekend as he raised the ante over the arctic territory. It is time for Europe to fight tariff fire with fire.
The president threatened a 10 percent duty from next month on US imports from the countries sending troops: France, Germany, Sweden, Finland, the Netherlands, Denmark and non-EU members the UK and Norway. That would increase to 25 percent in June until a deal is reached for his government to buy Greenland. In a grim flashback to last year’s EU-US trade deal when the bloc had to swallow a 15 percent tariff on its transatlantic exports, the underbelly of Europe’s trade-dependent, soft-power regime is fully exposed.
The cost of such extra tariffs would be high. Bloomberg Economics estimates they could cut these countries’ US exports by up to 50 percent. Germany, Sweden and Denmark look especially vulnerable, but another timid acquiescence from the Europeans would be disastrous. This is textbook economic bullying, driven by a leader who has said the only limitation on his global powers was “[his] own mind.” If last year’s tariff deal is already being rewritten on the fly by the Americans, where will it stop? There has to be a point when even mice do more than squeak apologetically and submit to worse trade terms than China.
So even as Germany appears to be shipping its dozen or so soldiers back home — job done, apparently — European leaders must be ready to play hardball if these levies materialize. The starting point is bolstering the European Parliament’s threat to hold back approval of last year’s trade agreement, which was hailed by Trump’s administration as providing “unprecedented levels of market access” for US products. The deal has not stopped the US from trying to strong-arm Brussels into going easy on the tech barons of Silicon Valley and Seattle over regulations and antitrust.
It is time, too, to unbox the EU’s “bazooka” for the fight ahead: The bloc’s Anti-Coercion Instrument is explicitly designed to defend member states put under tariff pressure by foreign powers. It allows retaliation beyond customs duties, and can potentially restrict market access for titans like Google owner Alphabet Inc.
That is a much bigger stick than the usual clobbering of more niche US companies such as Harley-Davidson motorcycles with higher import taxes. French President Emmanuel Macron, still nursing his wounds after failing to stop an EU trade deal with Latin America hated by French farmers, favors this trade weapon — and he has been backed by German industrial association VDMA.
“Europe must not allow itself to be blackmailed,” the VDMA president wrote over the weekend.
Then comes the longer-term question of whether Europe can get by on defense and security without US backing — in Ukraine first and foremost — the answer to which was a resounding no last year when the EU had to accept the 15 percent levy. However, just as those transatlantic trade terms have barely survived the New Year, last year’s rush to declare NATO as being back and better than ever under “Daddy” Trump looks wildly premature. Denmark is right to say that a hostile takeover of Greenland would be the end of the alliance as we know it.
Trump’s new threats go beyond the NATO “brain death” that Macron spoke of a few years back, and toward something like the forced obedience of the Soviet bloc’s Warsaw Pact. To avoid this miserable fate, the rearming of Europe is ever more urgent.
European unity will be found wanting, of course. Poland and Italy are not on the tariff list and will doubtless try to de-escalate. Trump’s continental allies can be counted on to sow discord. The UK, under the cautious stewardship of British Prime Minister Sir Keir Starmer, might pursue its own routes to exemptions.
Nor will Europe be under any illusion: If the White House is determined to take Greenland in the face of opposition from the US public, Congress, the EU, NATO and the overwhelming majority of Greenlanders, it will succeed. Former Trump adviser Steve Bannon has called the arctic “the Great Game of the 21st century.”
However, if the status of a US ally means being subjected to trade and technological subservience rather than being lavished with Cold War-style aid, cutting loose will become preferable. Trump’s arrogant, unnecessary aggression over Greenland might well become that moment. Canada is getting closer to China, even though it shares about a 9,000km border with the US. In today’s White House, reality has outpaced fiction. Europe’s mice must quickly find their inner tigers.
Lionel Laurent is a Bloomberg Opinion columnist writing about the future of money and Europe. Previously, he was a reporter for Reuters and Forbes. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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