The weekend gone by could have seismic implications for global trade and geopolitics after the US threatened European nations with hiked tariffs as it intensified rhetoric over its ambitions to control Greenland.
The latest muscular use of trade policy by Donald Trump will almost certainly dominate this week’s trade agenda, with the global order, as we’ve known it, also coming into focus at this week’s World Economic Forum (WEF) meeting in Davos, Switzerland.
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US tariffs over Greenland dispute
US president Donald Trump dialled up the heat on European nations in his efforts to secure permanent control of Greenland over the weekend.
Posting on his Truth Social platform, he said he would impose 10% tariffs on European nations, including the UK, until they acceded to his demands. The president wrote that “it is imperative that, in order to protect Global Peace and Security, strong measures be taken”. This would include securing US control over Greenland and the Arctic, amid Russian and Chinese competition.
“Starting on February 1st, 2026,” he wrote, Denmark, Norway, Sweden, France, Germany, the UK, Netherlands and Finland “will be charged a 10% Tariff on any and all goods sent to the United States of America”.
“On June 1st, 2026, the Tariff will be increased to 25%. This Tariff will be due and payable until such time as a Deal is reached for the Complete and Total purchase of Greenland.”
European response
UK prime minister Sir Keir Starmer responded this morning to say that a trade war is in no party’s interest, and that the threats were “completely wrong”, while suggesting retaliatory tariffs may not be his first course of action. He reiterated the line of Denmark, of which Greenland is an autonomous territory, that it was for Greenlanders to decide what should happen to the island.
Emmanuel Macron, the French president, is calling for the EU to use its Anti-Coercion Instrument, its so-called ‘trade bazooka’, to impose retaliatory trade measures on the US over the threats. German finance minister Lars Klingbeil has backed him, saying:
“Everything must be prepared now. We are ready to find solutions. We are extending our hand, but we are not prepared to be blackmailed.”
The measures could hit a vast tranche of US exports to Europe, affecting as much as €93bn in goods as part of a list compiled during the previous trade tensions between the EU and US last year. There has already been a cooling on the Euro Stoxx 50 index, which opened 1.5% lower today (19 January).
A European diplomat speaking to the FT said the measures would be a response to Trump’s “pure mafioso methods”.
“At the same time we want to publicly call for calm and give him an opportunity to climb down the ladder. The messaging is carrot and stick.”
Trump reiterated his belief that “Denmark has been unable to do anything” about the “Russian threat” in the region in a further post late last night.
‘Impact for the UK will be huge’
Speaking to the Telegraph and the Independent over the weekend, Chartered Institute director general Marco Forgione said:
“We’re going to see goods trading with the US suddenly becoming uncompetitive in the marketplace. So the impact for the UK will be huge, particularly at a time when we are struggling with very anaemic growth.
“If he imposes these tariffs and they remain for any period of time, it is going to put extreme pressure on the UK economy – and could potentially be enough to tip the UK into recession.”
US standards for UK goods demand
The US is making demands elsewhere on trade, as the Trump administration pushes the UK to adopt American standards, including on food.
Sources close to discussions between the two sides spoke to Politico to say they believe the UK could make compromises on some standards and that, while there were “red lines” around food regulations, the “concern is that these red lines that have been red lines from the outset and for years are under increasing threat of being breached”.
Some speaking to the publication also expressed concerns that making compromises on standards with the US could have implications for the UK’s ‘reset’ with the EU. One source said:
“The possibility to have the kinds of changes that the US is putting forward become much diminished when those agreements with the EU start to get over the line.”
A UK government spokesperson responded to a request for comment to say:
“We have and always will be clear that we will uphold our high food, animal welfare and environmental standards in trade deals, and negotiations will continue with both the EU and US on strengthening our trading relationship.”
IMF publishes 2026 World Economic Outlook
The International Monetary Fund (IMF) has published its January 2026 World Economic Outlook ahead of this week’s annual meeting of political and business leaders in Davos, Switzerland.
The report’s authors expect global growth to “remain resilient” at 3.3% this year, dipping slightly to 3.2% in 2027. They argue that “headwinds from shifting trade policies” will be mitigated by “surging investments” in tech including AI, particularly in North America and Asia, though growth could fall if AI does not live up to expectations. You can read the full report here.
Momentous Davos gathering
This week’s meeting in Davos will likely be dominated by Trump’s use of trade as an instrument to shift European opinion on his desire for Greenland, as well as his broader protectionist agenda.
Trump will be in attendance this year after speaking remotely at last year’s meeting. He will be joined by a raft of senior figures from his administration as well as tech business leaders including those of Microsoft and Nvidia.
Also today in trade
· The UK has marked the one-year anniversary of a new partnership with Ukraine, with deputy prime minister David Lammy and trade minister Chris Bryant visiting Kyiv with a new £20m commitment to support Ukraine’s infrastructure rebuild
· Chancellor Rachel Reeves said the easing of rules for firms listing in the City of London means there are “signs of a golden age” for the finance hub
· A seven-day meeting of the leadership of Vietnam’s ruling Communist Party will address the country’s approach to US trade policy, the FT reports
Other dates for the diary
Monday: EU and Canada inflation data publications
Tuesday: EU Q3 GDP estimate, China interest rate announcement
Wednesday: Meeting of Nato military leaders in Brussels begins
Thursday: US Q3 GDP estimates updated
Friday: PMIs published for UK, US, EU and Japan, Japanese prime minister Sanae Takaichi expected to dissolve parliament
Saturday: 40th anniversary of Wapping printers’ strike
Sunday: Burns Night
