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EU Parliament Suspends US Trade Deal Ratification Amid Tariff Threats Over Greenland

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European Parliament Suspends US Trade Deal Amid Tariff Threats and Greenland Dispute

Trade Deal Suspension

Pending Ratification Stalled

The European Parliament's international trade committee has halted its approval of the Turnberry Deal, a trade framework agreed to in July 2023. Bernd Lange, chair of the committee, announced that progress on the deal would not resume "until the US decides to re-engage on a path of cooperation rather than confrontation."

"Continued and escalating threats, including tariff threats, against Greenland and Denmark made further action impossible."

European Commission President Ursula von der Leyen commented on the situation, stating: "In politics as in business, a deal is a deal. When friends shake hands, it must mean something."

Background of the Turnberry Deal

The trade framework was established in July 2023 at President Trump's Turnberry golf course in Scotland. Under its terms:

  • The US set a 15% tariff ceiling on most EU goods, reduced from an initial 30% threat
  • The EU agreed to purchase $750 billion worth of US energy exports
  • The EU committed to $600 billion in investments in the United States
  • Tariffs on generic pharmaceuticals from the EU were removed
  • The EU lowered tariffs on certain US goods, aimed at benefiting American agricultural and industrial companies

The deal remained a framework requiring further negotiation and ratification by all 27 EU member states. The US Supreme Court ruled in February 2026 that the president lacked legal authority to declare an economic emergency and impose "reciprocal" tariffs, striking down part of the legal basis for the tariff reductions. The Trump administration subsequently opened trade investigations under Section 301 of the Trade Act of 1974 to replace the tariffs struck down by the court.

New Auto Tariff Announcement

Tariff Increase Plan

President Trump announced on social media that he would raise tariffs on cars and trucks imported from the European Union from 15% to 25%, set to take effect the following week. Trump cited non-compliance with the trade deal but did not specify his objections. Vehicles made in the US by EU companies would be exempt from the increase.

Affected Parties and Context

German automakers would be most affected by the tariff increase. Observers noted the tariff threat could be linked to broader tensions, including NATO's involvement in the US-Israel military campaign in the Middle East and Trump's response to German Chancellor Friedrich Merz's comment that the US was being "humiliated" in its conflict with Iran.

Scott Lincicome of the Cato Institute stated the president would likely use Section 232 of the Trade Expansion Act of 1962 to raise tariff rates.

Greenland Dispute

Timeline of Threats

President Trump stated his intention for the US to acquire Greenland, a self-governing territory of Denmark. He threatened tariffs on seven European Union countries and the UK if they did not allow US control over Greenland.

During a speech at the World Economic Forum in Davos, Trump stated the US would not use military force to acquire Greenland but did not retract his tariff threat. He later announced the withdrawal of the tariff threat, stating that a "framework of a future deal" concerning Greenland and the Arctic Region had been established following a meeting with NATO Secretary General Mark Rutte. The specific details of this framework remained unclear.

EU Response

Bernd Lange described Trump's assurance against military force as "a small positive element" but emphasized that tariff pressure represented "a new quality of relation" making compromise impossible as long as the threat persisted.

Potential EU Retaliation

Prepared Measures

EU leaders scheduled a meeting to discuss a coordinated response. Previously announced options include:

  • Retaliatory tariffs on approximately €93 billion ($109 billion) worth of US goods, including Boeing airplanes, soybeans, and Kentucky bourbon
  • Deployment of the bloc's "Anti-Coercion Instrument" (ACI) , which would allow the European Commission to impose restrictions on US goods and services, including investment restrictions, suspension of intellectual property protections, suspension of business licenses, and market access bans

French President Emmanuel Macron urged the EU to activate the anti-coercion instrument. The ACI, proposed in 2021 to counter economic coercion, has not been used previously.

A previous reprieve on EU retaliatory tariffs was set to end on February 6, meaning EU levies could come into force on February 7 without an extension or approval of the new deal.

US Official Response

US Treasury Secretary Scott Bessent advised European leaders against retaliation, urging an "open mind." Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer warned that the US would respond to any retaliation. Greer stated that countries following US advice "tend to do okay" while "crazy things happen" otherwise.

Reactions from Trade Representatives

EU Perspective

Bernd Lange called the tariff increase unacceptable and a sign of US unreliability, accusing the Trump administration of breaking commitments on steel and aluminum tariffs. Lange stated that the US was violating the terms of the previous trade agreement by threatening additional tariffs.

US Perspective

US Trade Representative Jamieson Greer stated that the EU had not fulfilled its commitments under the deal, including increased purchases of American agricultural and energy products.

Industry Response

Jennifer Safavian, CEO of Autos Drive America, warned that the tariff increase would threaten progress in opening EU markets and growing the US auto industry.

Economic and Market Impact

Financial Markets

Financial markets reacted sharply to the trade tensions and tariff announcements:

  • Dow Jones Industrial Average: declined by over 1.7%
  • S&P 500: fell more than 2%
  • Nasdaq: closed approximately 2.4% lower
  • European stock markets: recorded a second day of losses
  • Asia-Pacific markets: showed mixed results, with declines in Japan and Australia, while Hong Kong and mainland China saw gains

Gold prices exceeded $4,800 per ounce.

The US dollar fell 0.5% against major currencies, with the euro rising to $1.1742 and the pound increasing to $1.346.

Broader Economic Context

The tariff announcements occurred during the ongoing Iran conflict, which has impacted global economic growth and inflation due to higher energy prices. The EU faced economic pressure from rising energy prices following the closure of the Strait of Hormuz. A recent AP-NORC poll found that 30% of US adults approved of Trump's handling of the economy.

Trade between the US and the EU collectively amounted to nearly $1 trillion in 2024, according to the US Commerce Department. The annual trade relationship was valued at $1.5 trillion in goods and services.