Europe Preps Trade Retaliation Against U.S. Amid Escalating Greenland Tensions

European Union officials are finalizing a package of retaliatory trade measures in response to perceived U.S. overreach in the Arctic, particularly concerning Greenland’s mineral resources and defense positioning. The proposed actions, expected to be formalized by mid-February, include up to 25% tariffs on U.S.-origin steel, aluminum, and specialty agricultural goods like corn and soybeans. These measures are designed to target key export sectors in the Midwest and Southeast, where political influence is significant. The move follows weeks of diplomatic strain after U.S. officials were reported to have engaged in backchannel discussions with Greenlandic authorities about securing access to rare earth deposits and expanding military infrastructure. European leaders view such actions as undermining NATO cohesion and EU sovereignty. The European Commission has cited the risk of a 'trade war' if the U.S. continues unilateral engagement in Arctic affairs. Financial markets responded immediately: EUR/USD fell to 1.0720, its lowest level since November 2025, while the DAX declined 1.4% on the day. The S&P 500 dropped 0.9%, with energy and industrial stocks leading losses. Meanwhile, USDCAD rose 0.6% as investors priced in potential supply disruptions to North American energy exports. LNG futures on the NYMEX spiked 4.3% as concerns mounted over potential restrictions on U.S. liquefied natural gas shipments to Europe. Affected industries include American agriculture, automakers reliant on imported European steel, and tech firms with EU-facing supply chains. The timing is critical, as the EU prepares to roll out its revised Carbon Border Adjustment Mechanism in March. Analysts warn that a full-scale trade rift could undermine global supply chains and exacerbate inflationary pressures in both regions.