U.S. threats of a Greenland takeover spark talk of trade wars
France’s finance minister warned that a U.S. move to seize Greenland could damage trade ties with the European Union after an analyst told CNBC that tariffs or economic sanctions could lead to a “trade war.”
US President Donald Trump has stepped up talk of annexing Greenland this month and has not ruled out taking it by force. Talks between the United States, Denmark and Greenland on Wednesday over the future of the world’s largest island ended without any diplomatic progress.
French Finance Minister Roland Lescure he told the Financial Times Economic ties between the United States and Europe could be damaged if Trump moves to seize self-governing Danish territory, he said on Friday.
“Greenland is a sovereign part of a sovereign country that is part of the EU. This issue should not be confused [with]” he said.
Asked whether the EU would hit Greenland with economic sanctions if the US invaded Greenland, Lescure told the FT: “I’m not going there. So obviously, if that were to happen, we would definitely be in a completely new world and would have to adapt accordingly.”
His comments come as a Democratic-led US delegation is expected to visit Copenhagen on Friday to meet Danish lawmakers.
Trump said the United States needs Greenland for national security reasons. Analysts told CNBC it wants to keep rivals away from emerging trade routes and potentially mining minerals critical to industries such as defense.
Dan Alamariu, chief geopolitical strategist at Alpine Macro, told CNBC via email that “significant” U.S. economic pressure on Denmark in the form of tariffs or sanctions “could likely mean a significant EU downturn to which the EU could respond in kind, leading to some form of trade war with the U.S. and continued headline risks.”
“This will shake the markets,” he said. “This would also call NATO into question, but we do not anticipate that this will happen or that NATO will disintegrate. The decline of domestic politics and markets will likely soften such initiatives by the Trump administration.”
Meanwhile, European troops arrived in Greenland late Thursday for a cooperative military exercise.
This shows the United States that “this is primarily an allied effort,” European Policy Center policy analyst Maria Martisiute told CNBC’s “Squawk Box Europe” on Friday. “If we want to strengthen veterans and defense in Greenland or the broader Arctic, this can be done through allied efforts, not in the hands of the United States.”
He said the exercise could “send a strong message” as European leaders stated their indisputable red lines, adding: “It is not yet clear how the United States will proceed on this issue.”
The European Commission, the EU’s executive arm, proposed doubling spending on Greenland in its latest draft budget.
“What is clear is that Greenland can rely on us politically, economically, financially and security,” European Commission President Ursula von der Leyen said on Thursday. he said.
