EU Suspends US Trade Deal Amid Greenland Tensions

The European Parliament has halted approval of a US trade deal after President Trump threatened Greenland. The move escalates transatlantic tensions and could trigger tariffs.

Strasbourg, France – January 22, 2026

European Parliament halts US trade deal approval

The European Parliament has officially suspended approval of a major US trade deal agreed in July, citing concerns over President Donald Trump’s repeated threats toward Greenland. The US trade deal had aimed to reduce tariffs on European goods and strengthen transatlantic economic cooperation. Lawmakers in Strasbourg stated the suspension was necessary after recent developments that, they say, challenge the sovereignty of Denmark and its territories.

The decision came as President Trump addressed the World Economic Forum in Davos, reiterating his interest in negotiating for Greenland while insisting he would not use military force. Despite the president’s assurances, the European Parliament maintained that the US trade deal could not proceed under the current climate of political uncertainty.

Circumstances and location of the suspension

The suspension was announced on Wednesday in Strasbourg, where members of the International Trade Committee cited the US administration’s Greenland comments as a direct violation of diplomatic norms. Trump’s remarks had come just days after threatening European countries with tariffs, sparking concerns of a broader trade conflict. Financial markets had already responded to the escalating rhetoric, with stocks in Europe and the United States experiencing volatility in early trading sessions.

The US trade deal itself was negotiated at Trump’s Turnberry golf resort in Scotland last July, reducing proposed US tariffs on European goods from 30% to 15%. In return, Europe had committed to investing in the US economy and adjusting domestic regulations to boost American exports. Despite reaching an initial agreement, the deal still required formal approval from the European Parliament to take effect.

Official statements and European response

Bernd Lange, chair of the European Parliament’s International Trade Committee, said lawmakers had “no alternative but to suspend work on the two Turnberry legislative proposals.” He emphasized that implementation of the US trade deal would remain on hold until the US engaged in cooperative dialogue rather than confrontation. Lange further warned that Trump’s actions “threatened the territorial integrity and sovereignty of an EU member state,” highlighting the EU’s firm stance on Denmark and Greenland.

Other influential parliamentarians, including German member Manfred Weber, supported the suspension. Weber stated that approval of the US trade deal “is not possible at this stage” and indicated that the EU may consider retaliatory measures if the confrontation continues. Lange also mentioned the potential deployment of an “anti-coercion instrument,” informally dubbed the “trade bazooka,” to counter unilateral US actions.

Why the suspension matters

The suspension of the US trade deal raises significant questions about transatlantic trade and economic stability. Markets reacted swiftly to the news, with European stock indices falling initially but recovering after Trump clarified he would not use military force. The move signals a renewed period of uncertainty in US-EU trade relations, which account for over €1.6 trillion in goods and services annually.

The Greenland dispute adds a geopolitical dimension to economic negotiations. By challenging Denmark’s sovereignty, Trump has prompted European lawmakers to reconsider the strategic context of the US trade deal. Analysts warn that without a resolution, the suspension could trigger retaliatory tariffs on American goods, reversing progress made in previous negotiations and raising the risk of a trade war.

Expected next steps and potential consequences

European officials have indicated that a final decision on retaliatory measures is likely to be made soon, with discussions scheduled for Monday. The EU had previously prepared €93 billion in potential levies against US products but paused implementation while trade negotiations continued. If no agreement is reached, these levies could be applied starting 7 February, creating immediate economic implications for transatlantic trade.

US officials have cautioned European leaders against retaliatory action. Treasury Secretary Scott Bessent, speaking in Davos, urged the EU to maintain an open dialogue and avoid hasty countermeasures. Meanwhile, ongoing legal challenges in the US, including a pending Supreme Court review of tariffs, further complicate the timeline and certainty surrounding the US trade deal.

Broader market and economic impacts

Financial markets have reflected the tension surrounding the US trade deal and Greenland dispute. European stocks faced initial losses, while US indices, including the Dow Jones, S&P 500, and Nasdaq, gained about 1% following Trump’s assurances against force. Commodity markets responded as well, with gold rising above $1,842 an ounce, a historic level, while silver hovered near $94 an ounce. These movements suggest investor concern over political and economic uncertainty.

The US trade deal’s suspension underscores the fragility of recent agreements. While some bilateral negotiations had temporarily eased tensions, the Greenland issue demonstrates that geopolitical disputes can quickly derail economic progress. Experts warn that delays or reversals in the deal could have cascading effects on global trade, supply chains, and investment flows.

Summary

The European Parliament’s suspension of the US trade deal represents a decisive response to President Trump’s Greenland-related threats. Lawmakers emphasized their commitment to Denmark’s sovereignty and territorial integrity while signaling readiness to impose countermeasures if required. The move leaves transatlantic trade negotiations in flux, with potential tariffs looming and financial markets closely monitoring developments.

Both sides now face pressure to clarify intentions. The EU must decide whether to extend the temporary reprieve on levies or implement punitive tariffs, while the US must address European concerns to revive the US trade deal. The situation highlights the interplay between geopolitical disputes and trade agreements, reinforcing the delicate balance in global economic relations.

Topics – EU trade deal, US trade deal, Greenland dispute, European Parliament, Donald Trump, US-EU relations, tariffs, international trade, trade tensions

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