Goldman Sachs economists forecast that President Trump’s newly threatened 10% tariffs targeting eight European nations—Denmark, Norway, Sweden, France, Germany, Finland, the UK, and the Netherlands—will subtract roughly 0.1% from eurozone GDP. This tariff action is part of the heated dispute over US ambitions to acquire Greenland, which those countries back as an autonomous territory of Denmark.
Although this incremental drag on growth appears limited, the political and economic uncertainty weigh on investor confidence and transatlantic relations. The European Union is mulling retaliation measures, including potential counter-tariffs and invoking an “anti-coercion” instrument designed to penalize US companies operating in Europe.
Given the EU’s readiness to escalate, a sustained tit-for-tat trade conflict seems likely, raising risks of deeper economic disruption beyond the initial growth impact. Policymakers face a delicate balancing act between economic interests and political sovereignty concerns.
Investors and businesses should prepare for ongoing volatility and potential disruptions in trade and capital flows as the standoff unfolds over the coming months.
