Goldman Sachs economists project that President Donald Trump's threatened 10% tariffs on imports from Denmark, Norway, Sweden, France, Germany, Finland, the UK, and the Netherlands will shave about 0.1% off the euro area's gross domestic product. This move reacts to Europe's support for Greenland amid US demands to acquire the semi-autonomous Danish territory.
While the tariff threat is a blow to European economic ties with the US, the limited hit reflects Europe's diversified trade relationships and the early stage of the trade escalation. Goldman economists see this as a warning shot rather than a crippling assault on European growth.
Europe's economic leadership faces balancing acts: responding to the tariffs without triggering a broader trade war, and managing political friction from the Greenland dispute. If trade tensions escalate, the economic impact could deepen, but for now the expected drag remains modest.
Investors and policymakers should watch for any moves toward higher tariff rates or retaliation measures, as those will be key to assessing how much this strain grows on transatlantic economic relations.
