EU puts US trade deal on ice in response to Trump’s Greenland threats

A long-negotiated trade deal between the United States and the European Union has been put on indefinite hold after the European Parliament moved to freeze the ratification process in response to President Donald Trump’s escalating threats to seize Greenland.

The European Parliament’s trade committee decided on Wednesday to postpone the ratification vote indefinitely, a move that throws the future of the agreement into doubt and underscores the severity of the political crisis now engulfing transatlantic relations.

The decision follows Trump’s weekend ultimatum that he would impose sweeping tariffs on several European countries unless the United States is allowed to acquire Greenland, a semi-autonomous territory of Denmark and a member of the European Union, through the Danish state.

Greenland dispute derails trade process

The trade agreement, reached with Washington last July, has been caught in what EU officials describe as an unprecedented escalation over Greenland.

Trump has vowed to slap tariffs on multiple European countries, arguing that economic pressure is necessary to force negotiations over the island’s transfer to US control.

“By threatening the territorial integrity and sovereignty of an EU member state and by using tariffs as a coercive instrument, the US is undermining the stability and predictability of EU-US trade relations,” said Bernd Lange, chair of the European Parliament’s trade committee, in a statement.

“We have been left with no alternative but to suspend work” on the trade deal, Lange added.

The committee’s move effectively halts the legislative process required to finalise the pact, even though parts of the agreement have already been provisionally implemented.

Details of the stalled agreement

The trade deal, struck last summer, was designed to avert a broader trade war between the EU and the US.

It set a 15% tariff on most EU goods entering the US in exchange for a commitment to eliminate all tariffs on US industrial goods and selected agricultural products shipped to Europe.

At the time, EU concessions were widely viewed as a pragmatic effort to stabilise economic ties with Washington, particularly as the bloc sought to preserve US security guarantees while Russia continued its war in Ukraine.

However, the agreement still requires formal approval by the European Parliament to become permanent.

That final step is now on hold, and several lawmakers have openly questioned whether ratification should proceed at all under the current circumstances.

Growing European backlash

Trump’s Greenland ultimatum has intensified long-standing criticism within Europe that the trade deal disproportionately favored the United States.

Even some lawmakers who previously supported the pact have said the Parliament cannot approve it while Washington is using tariffs to pressure an EU member state over territorial sovereignty.

Trump has said a 10% tariff on imports from eight European countries will take effect on Feb. 1, with the rate rising to 25% by June, unless negotiations lead to what he has described as the “purchase of Greenland.”

The European Parliament’s decision was widely anticipated. Senior lawmakers from the largest political groups had proposed delaying the vote on Saturday, shortly after Trump’s tariff announcement, signalling that patience in Brussels had run out.

European leaders are now preparing a broader response. Heads of government are scheduled to meet in Brussels on Thursday to discuss next steps, including potential countermeasures if the US follows through on its tariff threats.

Options under consideration include retaliatory tariffs on up to €93 billion ($109 billion) worth of US goods, as well as the possible use of the EU’s so-called anti-coercion instrument.

That mechanism would allow the bloc to restrict US companies’ access to the EU market, curb foreign investment, and impose additional fees or trade barriers.

European Commission President Ursula von der Leyen struck a firm tone in remarks to EU lawmakers earlier on Wednesday.

“Europe prefers dialogue and solutions — but we are fully prepared to act, if necessary, with unity, urgency and determination,” von der Leyen said.