Europe pauses trade retaliation against US following last-minute diplomatic reversal

The EU has decided to extend its suspension of €93 billion ($109 billion) in retaliatory tariffs against the United States for another six months. This comes after Donald Trump, the 47th president of the United States, finally backed off his plan to punish EU countries that refused to support his push to buy Greenland.

Trump had earlier warned that starting February 1, a 10% tariff would hit eight EU countries, climbing to 25% in June, unless a Greenland deal was made.

But after meeting NATO Secretary General Mark Rutte in Davos, Trump dropped the threat and claimed a new deal had been reached. That last-minute reversal gave EU lawmakers just enough political cover to pause their retaliation.

Trump threat forces EU to delay anti-US trade tools

The European Commission, which handles trade policy for the EU, now plans to officially propose extending the pause, which was due to expire on February 7.

Olof Gill, a spokesperson for the Commission, told reporters Friday in Brussels, “We achieved our objective through diplomatic and political means, which will always be our preference rather than going down a spiral of measures and countermeasures.” He added that the EU can bring back the counter-tariffs at any time if needed.

The proposed EU retaliation, already approved but not yet enforced, would have slammed major American products (like Boeing aircraft, US-made cars, and bourbon) if the Greenland pressure campaign had gone forward.

That threat was tabled during earlier negotiations when Trump and European Commission President Ursula von der Leyen signed a trade pact in Scotland last year. But Trump’s obsession with Greenland derailed that deal again last week.

The European Parliament had frozen the ratification of that trade agreement when Trump escalated the Greenland issue. Now, with Trump reversing his position after Davos, the Parliament is expected to resume the process. Roberta Metsola, president of the European Parliament, confirmed this ahead of a summit of EU leaders on Thursday.

The EU had also considered using its most powerful trade weapon, the anti-coercion instrument, against the US, something rarely even discussed. The fact that the idea was floated shows how close things got to blowing up completely.

EU leaders focus on unfinished trade deal and demand Ukraine priority

Even with the pause in tariffs, EU leaders aren’t celebrating. Polish Prime Minister Donald Tusk said, “There is certainly no reason for any kind of excessive optimism… very serious tasks still lie ahead of us, and we have wasted some time.” Swedish Prime Minister Ulf Kristersson agreed, saying, “I really hope that we can now get back to serious discussions.”

The nearly completed EU-US trade deal is still hanging in the balance. Trump’s earlier demand that Denmark hand over Greenland (literally buy the territory) caused chaos. The EU, as well as NATO allies, refused, and Trump answered with trade threats. It took another round of meetings, this time with NATO’s Mark Rutte, to get him to stand down.

“Our focus must now be on moving forward on the implementation of that deal,” said European Council President Antonio Costa on Thursday.

Trump’s behavior on this issue hasn’t been consistent. He went back and forth multiple times. At one point, it looked like EU pressure was finally working, after a quiet meeting in Paris in early January. But then the Greenland stunt hijacked everything.

Now that Trump has stepped back again, some leaders want to shift attention. Tusk warned that the situation in Ukraine is being ignored while leaders are distracted by what he called “unnecessary turmoil.” Talks between Trump’s envoy Steve Witkoff, Jared Kushner, and Vladimir Putin were already taking place in Moscow when the EU summit was happening.

“It cannot be the case that, through both necessary and unnecessary turmoil and emotions, Ukraine is pushed into the background,” Tusk said. “We will need to persuade our American friends and all Europeans to refocus on what is fundamental to our security.”

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