Donald Trump's Greenland ultimatum: Escalation on January 17 – When the most important ally suddenly becomes the enemy

Trade war as leverage: When geopolitics takes economic relations hostage

Trump's Greenland ultimatum: Why this trade war could break up NATO

On January 17, 2026, Donald Trump brandished an economic weapon unprecedented in its symbolic power and radicalism. The announced tariffs against eight European countries, including Germany, not only mark a new level of escalation in the transatlantic relationship, but also demonstrate the return of a political mindset that views economic interdependence as leverage for territorial expansion. The pretext is as bizarre as it is revealing: because European states are sending soldiers to Greenland at Denmark's request, tariffs of ten percent are threatened starting in February, rising to 25 percent in June. The condition for suspending these measures is an agreement on the sale of Greenland to the USA.

This episode reveals fundamental shifts in the world order. Economic interdependence, long lauded as a guarantor of peace and stability, is transforming into a vulnerability that can be deliberately exploited. The rules-based trading system, embodied by the World Trade Organization, is proving to be a toothless tiger. And the transatlantic alliance is facing a critical test, with one NATO partner attempting to coerce another into territorial concessions through economic blackmail.

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The geostrategic logic behind the Greenland obsession

Trump's fixation on Greenland follows a clear power-political rationale deeply rooted in American history. Since 1832, Washington has been abuzz with considerations about the world's largest island. After World War II, President Truman offered Denmark $100 million in gold for the supposedly worthless icy wasteland. The offer failed, but in 1951 the US secured exclusive military rights. The Pituffik Space Base, formerly Thule Air Base, has since served as the northernmost outpost of American power, equipped with early warning systems for ballistic missiles and as a strategic hub between North America and Europe.

Greenland's importance has dramatically intensified due to three developments. First, the Arctic ice is melting four times faster than the global average. This is opening up new shipping routes, particularly the Northeast Passage along the Russian coast, whose traffic has more than doubled in a decade. The geopolitical landscape is undergoing a fundamental shift: what was once inaccessible is becoming a strategic transit zone between Asia and Europe. Second, an estimated 43 of the 50 minerals classified as critical by the US lie beneath the ice, including the world's largest deposits of heavy rare earth elements. The Kringlerne deposit alone could supply 60 percent of Europe's annual demand. Third, competition for Arctic influence has intensified: China is investing in Greenlandic mining projects, and Russia is massively expanding its Arctic infrastructure.

In this context, the Trump administration published its National Security Strategy in December 2025, which prioritizes the Western Hemisphere. The so-called Donroe Doctrine, a revival of the Monroe Doctrine of 1823, explicitly asserts American hegemony across the entire double continent. The document states unequivocally that the US will prevent non-continental competitors from controlling strategically important assets in the Western Hemisphere. Greenland, geographically part of North America, thus becomes the logical target of a neo-imperialist foreign policy.

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Germany's economic dependencies

Germany is at the center of the announced sanctions, and for good reason: hardly any country benefits as much from transatlantic trade as the Federal Republic. In 2024, the United States was Germany's most important trading partner for the first time since 2015, with a foreign trade volume of €252.8 billion. In the first quarter of 2025, Germany exported goods worth €41.2 billion to the USA, while imports amounted to only €23.5 billion. The trade surplus of €17.7 billion illustrates this asymmetric dependence.

The US tariffs, already introduced during 2025, have left deep scars. From January to July, Germany's trade surplus with the US fell by 15.1 percent to €34.6 billion, the lowest level since the 2021 coronavirus crisis. In the first three quarters of 2025, German exports to the US plummeted by almost eight percent. Nearly 70 percent of this decline is attributable to three key sectors: the automotive industry, chemicals, and mechanical engineering.

The automotive industry is being hit particularly hard. Exports of motor vehicles and motor vehicle parts have fallen by around 15 percent. The US tariffs, initially 25 percent and later reduced to 15 percent since April 2025, have severely impacted German manufacturers. At the same time, competition from China is intensifying, with aggressive pricing strategies and technologically catching-up products putting German manufacturers under pressure in third-country markets as well.

The mechanical engineering sector has seen a decline of almost ten percent. The draconian US tariffs on steel, aluminum, and products made from these materials are having a particularly severe impact. These tariffs currently stand at 50 percent and are affecting a sector traditionally considered the backbone of German industry. The chemical industry has also suffered export losses of around ten percent, exacerbated by its structural weaknesses caused by high energy prices in Germany.

Studies by the Institute for Macroeconomics and Business Cycle Research predict that the tariffs will reduce German economic growth by approximately a quarter of a percentage point in both 2025 and 2026. This would mean zero growth for 2025. Around 1.2 million German jobs depend directly on US exports. A survey by the German Chambers of Industry and Commerce shows that 54 percent of German companies intend to reduce their US business, and 26 percent are suspending investments.

The paradox of mutual dependence

The portrayal of the US as an all-powerful actor capable of blackmailing Europe at will is, however, an oversimplification. A detailed analysis by the Cologne Institute for Economic Research reveals a surprising picture: The United States is significantly more dependent on EU imports than widely assumed. For almost three out of ten of all product categories imported by the US, the import share from the EU was 30 percent or more in 2024. For 3,120 product categories with a total value of $287 billion, the US sourced at least half from the EU.

Particularly noteworthy: The US is now more dependent on the EU for imports than on China. While the number of product categories with a minimum Chinese content of 50 percent has decreased from 3,588 to 2,925 since 2010, the corresponding figure for the EU rose from 2,624 to 3,120 during the same period. The value of US imports from the EU in these product categories grew by 147 percent between 2010 and 2024, while corresponding imports from China increased by only 12 percent.

This structural dependency affects strategically important sectors: chemical products, machinery, electrical equipment, metals, metal goods, as well as highly specialized industrial goods and military-relevant technologies. For approximately 1,300 product groups with an import value of $132 billion, the EU's share has consistently exceeded 50 percent over the past five years. This long-standing dominance cannot be compensated for in the short term by alternative suppliers, which means that Trump's tariffs will also have a significant impact on the American economy.

The tariffs already imposed have led to rising inflation rates in the US, which are eroding real disposable incomes. The Federal Reserve's monetary policy remains more restrictive than hoped. Forecasts predict that the US could experience a growth loss of 0.6 percentage points in 2025 and 0.7 percentage points in 2026. This significantly exceeds the projected losses for Germany.

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The collapse of the multilateral trading order

The Trump administration is waging a systematic attack on the World Trade Organization. The announced reciprocal tariffs, under which the US would impose the same tariff rate on imports as on US exports to partner countries, fundamentally violate the WTO principle of most-favored-nation treatment. This principle states that a country must grant each trading partner the same advantages it has already granted to another country.

Trump justifies the tariffs legally with laws such as Section 232 of the Trade Expansion Act of 1962, which permits trade restrictions on grounds of national security, and the International Emergency Economic Powers Act. The WTO arbitration panel had already ruled similar US tariffs from Trump's first term illegal in 2022. However, the US has been blocking the regular appointment of new members to the WTO Appellate Body for years, effectively paralyzing the dispute settlement mechanisms.

The result is a state of legal anarchy in global trade. While theoretically affected countries can initiate WTO proceedings, enforcement mechanisms are lacking. Rulings are ineffective when a major power like the US simply ignores them. The return to bilateral power negotiations means that economic strength trumps the law. Smaller economies without strategic alternatives must submit to Washington's demands. Brazil, Syria, Laos, and Myanmar face US tariffs of 40 to 50 percent without effective legal recourse.

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The breaking point of the transatlantic alliance

The Greenland conflict exposes a fundamental weakness of NATO: Article 5 of the North Atlantic Treaty, the mutual defense clause, contains no automatic mechanism. The text merely states that an attack against one ally is considered an attack against all. Each state decides individually what measures to take. A decision by the North Atlantic Council as to whether the collective defense clause has been invoked requires unanimity. In an absurd scenario in which the US itself were to launch a military attack on Greenland, the US would have to agree to invoke its own collective defense clause.

Denmark cannot count on NATO protection in its conflict with Washington. The European response is therefore focused on Article 42, Paragraph 7 of the EU Treaty, the solidarity clause. This clause is more stringently worded: in the event of an armed attack on the territory of a member state, the other member states owe it all the aid and support within their power. A spokesperson for EU High Representative Kaja Kallas clarified that Greenland, as part of the Kingdom of Denmark, falls under this clause in principle.

The clarification is legally controversial, as Greenland voted to leave the then European Community in a 1982 referendum. However, politically it sends an unambiguous signal: Germany and the other EU member states would have to provide military assistance to Denmark in a crisis. This would set a precedent in which European armed forces could fight against American troops. A scenario that would have been considered science fiction just a few years ago is now moving into the realm of the theoretically conceivable.

As a sign of solidarity, Germany, France, Sweden, Norway, Finland, the Netherlands, and the United Kingdom are sending soldiers to Greenland. The German Armed Forces (Bundeswehr) participated with 15 soldiers in a reconnaissance mission evaluating possibilities for joint military exercises. The deployment of frigates for maritime surveillance, P-8 Poseidon long-range reconnaissance aircraft, and even the deployment of Eurofighters are being considered. The symbolic significance is considerable: Europe is demonstrating its readiness to defend the borders of a member state, even if the aggressor is its most important ally.

The White House reaction illustrates the dynamics of the escalation. Spokeswoman Karoline Leavitt declared that European soldiers would not influence the president's decision-making process. Shortly afterward, Trump announced the tariffs, explicitly as retaliation for the military mission. The message is clear: anyone who opposes Washington's territorial ambitions will be economically punished.

Greenland's fragile independence aspirations

The Greenlandic population finds itself in a dilemma between its historically rooted desire for independence and economic reality. Surveys show that 56 to 64 percent of the inhabitants favor secession from Denmark. At the same time, 85 percent reject joining the USA. The paradox: Greenland wants to be independent, but not become American. Yet 80 percent would reject independence if it led to a decline in their standard of living.

The economic challenges are immense. Greenland's gross domestic product is only US$3.1 billion, with a per capita GDP of US$57,000. Danish subsidies amount to approximately €500 million annually, representing around 20 percent of GDP and 40 to 50 percent of the state budget. Around 40 percent of the working population is employed in the public sector. The economy is extremely heavily reliant on the export of fishery products. Growth is slowing: the Danish central bank forecasts only 0.8 percent for 2024 and a mere 0.2 percent for 2025.

The hoped-for raw material resources cannot be extracted in the short term. The Greenlandic government has banned the extraction of oil, gas, and uranium to prevent further fueling climate change. Even with permitted minerals, mining is hampered by extreme costs: lack of infrastructure, temperatures far below zero, ice-covered areas, and a shortage of skilled personnel. According to Greenland's Minister of Natural Resources, it recently took 16 years to open a mine. Companies have to build ports, roads, and power lines from scratch. Experts estimate that it will be decades before Greenland's rare earth elements can be extracted competitively on the world market.

A Chinese-backed rare earth project stalled in 2021 after the Greenlandic government banned uranium mining. Currently, China dominates the global market with 60 percent of production and 93 percent of processing. In 2023, Germany imported a total of 5,200 tons of rare earths, 71 percent of which came directly from China. Low global market prices currently make new projects outside of China unprofitable. Even within China, all companies are reporting economic difficulties.

The Greenlandic government is focusing on diversification: expanding hydropower, establishing data centers, and developing tourism. However, visitor numbers remain manageable at around 70,000 per year. The EU is supporting Greenland with €225 million from 2021 to 2027 for sustainable development, education, and green growth. Denmark announced an additional investment package of the equivalent of €220 million in September 2025, including funding for a deep-water port and airport infrastructure.

Meanwhile, the US is trying to drive a wedge between Greenland and Denmark. Trump's special envoy, Jeff Landry, is planning a visit in March 2026 and has stated his belief in a possible agreement. This strategy capitalizes on Greenland's frustration with their continued dependence on Copenhagen. Should an independence referendum be successful, a sovereign Greenland could theoretically conclude treaties directly with the US, without Danish approval. However, the likelihood remains low: a referendum is improbable in the short term, as a commission would first have to define the procedures. Even for 2025, most parties were unwilling to commit to a specific date.

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Strategic implications for Germany and Europe

The German government faces fundamental decisions. The export-oriented German economy, in which almost one in four jobs depends on exports, cannot afford to lose the US market. At the same time, the Greenland conflict demonstrates that economic interdependence is no guarantee against political blackmail.

Economists recommend a strategic realignment: Germany must tap into new markets in South America, India, and Indonesia. The Mercosur agreement between the EU and South American countries, concluded in December 2025, is a first step. The agreement, which was negotiated for a quarter of a century, also came about due to a "Trump effect." The realization took hold that Europe must diversify its trading partners if the US, its second major partner after China, increasingly becomes a competitor.

At the same time, Germany's competitiveness as a business location must be improved. High energy prices, bureaucratic hurdles, and infrastructure deficits weaken the position of German companies. The chemical industry does not primarily suffer from US tariffs, but from structural problems that the tariffs merely exacerbate.

European unity is becoming a matter of survival. As the world's second-largest economy, the EU possesses considerable negotiating power, but only if it acts in unison. Studies show that the US is more dependent on European imports in many sectors than vice versa. These dependencies must be used as leverage in negotiations. China demonstrated in the rare earth conflict how effective counter-pressure can be: After Chinese export restrictions, the US refrained from imposing excessively high tariffs.

Security policy requires a radical reorientation. For decades, Europe relied on the American security umbrella. The Greenland conflict demonstrates that this guarantee is no longer unconditional. If a US president considers territorial expansion in Europe and views economic blackmail as a legitimate means, Europe must develop its own defense capabilities. In this light, Chancellor Merz's demand to increase defense spending to three percent of GDP no longer appears as a mere demand, but as an existential necessity.

Between realism and adherence to principles

The economic analysis of the Greenland crisis leads to uncomfortable truths. The rules-based international order established after 1945 is eroding rapidly. It is being replaced by a world in which economic interdependence is weaponized, multilateral institutions are toothless, and bilateral power politics dominate. Germany and Europe must navigate this new reality without betraying their own values.

The short-term response combines pragmatism with principled resolve. The EU Commission has reached an agreement with Trump on a tariff of 15 percent for most EU exports, significantly below the threatened 50 percent. Critics see this as a defeat, while supporters argue it could have been worse. In return, the EU reduced tariffs on US imports of industrial goods to zero, a concession to American economic power.

At the same time, the EU drew red lines. The EU's digital laws, in particular the Digital Markets Act and the Digital Services Act, which restrict the market power of American tech companies, are not up for debate. Europe is asserting regulatory sovereignty in strategic areas.

The military presence in Greenland sends an unmistakable message: Europe will defend its territorial integrity, if necessary even against the USA. The economic costs of this stance are considerable. The announced additional tariffs of ten to 25 percent could cause German exports to plummet further, jeopardize thousands of jobs, and plunge entire industries into crisis.

But the price of giving in would be higher. If Europe accepts that economic blackmail leads to territorial concessions, it opens Pandora's box. Other actors, especially China and Russia, would learn that trade wars are legitimate means of redrawing borders. The stability of the entire post-war order would be at stake.

The medium-term strategy must focus on resilience. Diversifying trading partners reduces dependencies. Investments in critical infrastructure, strategic industries, and technological sovereignty create room for maneuver. Building European production capacities for key technologies, from semiconductors to batteries, reduces vulnerability.

In the long term, the question is which world order will shape the 21st century. A multipolar constellation in which major powers defend and expand their respective spheres of influence by any means necessary? Or an order based on law rather than power, promoting multilateral cooperation instead of bilateral blackmail, and understanding economic interdependence as an opportunity rather than a weapon?

Germany and Europe stand at a historic crossroads. The Greenland crisis is more than a bizarre outburst of American megalomania. It marks the end of an era in which economic logic and political rationality were considered inseparable. In this new era, power is what counts. The question is not whether Europe must face this reality, but how it does so without selling its soul.

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