Greenland galvanizes Europe to confront new US reality

Europe may have rallied to see off President Donald Trump over Greenland, but its leaders recognise the confrontation is unlikely to be the last in dealings with his increasingly strident version of the United States.

The stakes could hardly be higher, given the $2 trillion trading relationship between the European Union and the US and the dominant role Washington continues to play in the NATO alliance and in support of Ukraine against Russia.

This week, in the space of a few hours at the World Economic Forum's annual meeting in Davos, Trump first ruled out taking Greenland by force and then removed the threat of new tariffs on eight European states standing in his way - hailing instead a vague deal for the Arctic island with NATO chief Mark Rutte.

European leaders believe Trump backed down in part because - in contrast to their more accommodating stance in last year's tariff negotiations - this time they made it clear he was crossing a red line by asserting that Greenland's status as an autonomous territory of Denmark was non-negotiable.

"All this shows that you cannot let the Americans trample all over the Europeans," said a European Union official, who requested anonymity to speak candidly about US ties.

"We did the right thing to push back, to be firm in what we said, but it is not over. My sense is that we will be tested constantly on issues like this," the official told Reuters.

While Europe may have learned the value of standing up to Trump, the challenge is ensuring it is less exposed next time.

"It's a hard route, and it's going to take time," said Rosa Balfour, director at Carnegie Europe, adding that Europe had "far more leverage than it has dared to use".

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Trump touts 'total access' Greenland deal as NATO asks allies to step up

Europe not seeking a split

An emergency summit of Europe's leaders on Thursday called for last year's EU-US trade deal to be put back on track after lawmakers suspended its ratification in protest over Greenland.

"Despite all the frustration and anger of recent months, let us not be too quick to write off the transatlantic partnership," German Chancellor Friedrich Merz said in Davos beforehand.

While seeking to stabilise the partnership, Europe is also taking steps aimed at "de-risking" it given the open antipathy from Trump, whose new national security strategy accuses the continent of freeloading on defence and demands it open its markets to US companies.

Europe is only too aware of how long it can take to get agreement among 27 nations with different histories, politics and economies, which was highlighted in taunts this week by US Treasury Secretary Scott Bessent.

Two EU officials said the Greenland row has accelerated discussions on how the approach taken on Ukraine - in which countries offer security guarantees on a voluntary basis and no one has a right of veto - can be extended.

"We should do more with coalitions of the willing and leave it open for others to follow if they want," said one, adding that joint efforts to boost Europe's development of artificial intelligence technology could be one example.

Coalitions such as the "E3" group comprising France, Germany and Britain focusing on security matters also allow non-EU states to take part, which speaks to others on the rough end of Trump policies.

"The middle powers must act together, because if we're not at the table, we're on the menu," Canadian Prime Minister Mark Carney said in a Davos speech to warm applause.

Another route is using the leeway afforded by EU law.

In December, EU states used an emergency provision to indefinitely immobilise hundreds of billions of dollars of Russian assets. That removed the risk of a pro-Moscow country like Hungary blocking the roll-over of the measure at some point and forcing the EU to return the money.

New European doctrine

Europe also plans to toughen up on economic policy.

Next month it will kickstart legislation that will include "Made in Europe" requirements on strategic sectors and strengthening conditionality clauses for any foreign direct investment in the EU.

"Some provisions were originally conceived to reduce reliance on China but in reality they will help us to de-risk from other markets," European Commissioner for Prosperity and Industrial Strategy Stephane Sejourne told Reuters.

"This will totally change the European doctrine on those sectors," Sejourne added.

Unlike Canada, there is no plan in Europe to pivot more towards China to compensate for transatlantic strains. But the bloc is actively pursuing others in a diversification drive.

While the impact of higher US tariffs on European goods is not clear - in fact Europe's trade surplus with the US initially rose over the course of 2025 as companies front-loaded exports ahead of the new levies - recent data shows that German companies nearly halved investments there last year.

After the signing of the EU-Mercosur pact this month - the largest in EU history - European Commission President Ursula von der Leyen said it is now "on the cusp" of a deal with India.

However, nobody is saying Europe can redress the imbalance with the US overnight, particularly on security.

Despite European commitments to a defence spending surge and even calls for an EU army, analysts say it will be years before its military might is up to tasks which now include bolstering Arctic security.

The question is whether the past few weeks provide a catalyst for Europe to start reducing its US dependencies.

"All this is not surprising," Swedish deputy Prime Minister Ebba Busch said of Trump's showing in Davos.

"The EU needs to toughen up," she told Reuters.