In an extraordinary escalation of geopolitical tension, President Donald Trump has reignited his pursuit of Greenland, transforming a territorial ambition into an all-out trade war. As I wrote this article, Trump has announced a new wave of punitive tariffs targeting eight European nations, effectively shattering a hard-won trade truce and leaving the transatlantic alliance in a very precarious state.
The latest threat involves a tiered escalation: a 10% tariff on all goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland starting February 1, 2026. If a deal for the “complete and total purchase” of Greenland is not reached by June 1, that figure will skyrocket to 25%.
This move is particularly jarring because it follows a period of perceived stability. In July 2025, the EU and the US concluded the Agreement on Reciprocal, Fair, and Balanced Trade, which set a 15% baseline tariff on most European exports. At the time, the deal was hailed as a “truce” that would protect the global economy.
The collapse of the 15% deal serves as a grim reminder for European diplomats. A deal with the current US administration is about as solid as walking on thin ice.. Just months after signing a “binding” trade pact, the White House has shown a willingness to weaponise commerce to settle unrelated territorial desires.
For Europe, the message is clear. The era of predictable diplomacy with the US is over. Agreements are no longer permanent settlements; they are temporary pauses in a continuous cycle of coercion.
European leaders are now facing the long known reality that appeasement with Trump is a road to perdition. If Europe is to stop this “bullying,” it must move beyond strongly worded letters
The EU is currently weighing the activation of its “Anti-Coercion Instrument” (ACI). Originally designed to counter Chinese economic pressure, this “big bazooka” would allow the EU to restrict US access to EU public procurement contracts, suspend intellectual property protections for American firms and Impose retaliatory tariffs on specific US sectors, such as tech and energy.
Perhaps the most potent—and dangerous—lever Europe holds is its role as America’s largest creditor. While the US possesses unmatched military might, it relies heavily on foreign capital to fund its massive deficits. According to recent data European countries (EU + UK) hold roughly $2.5 trillion in US Treasuries. If the EU were to coordinate a “slow-walk” or a partial dump of US Treasuries, it could trigger a spike in American borrowing costs and destabilise the dollar. While this is a “suicide pill” for global markets, this mere threat may be the only language the current US administration respects.
Paradoxically, Trump’s Greenland gambit may be the “Sputnik moment” the European Union needed. For decades, the project of a Federalised Europe—with a unified army, a single fiscal policy, and a central treasury with common debt instruments—has been stalled by national interests.
However, the new reality of a “go-it-alone” America leaves the EU with no other options. If individual nations like Denmark can be picked off and bullied through trade, the only survival strategy is total integration. The Greenland crisis has made it clear that “Strategic Autonomy” is no longer a talking point; it is an existential necessity. By constantly attacking Europe and now even having to defend its territorial integrity against its own primary ally, Trump may have inadvertently laid the first stone of a United States of Europe.
For Malta, a federalised Europe represents an existential trade-off. On one hand Malta would gain the protection of a continental superpower against American trade “bullying,” but at a cost. Malta would likely have to sacrifice its fiscal sovereignty—specifically its competitive corporate tax rates—to satisfy EU-wide tax harmonisation. Ultimately, Malta would risk having its voice being diluted by the move away from veto-based voting. The “thin ice” of the current geopolitical climate will likely have Malta needing to face a new hard reality in the very near future.
