Jonathan Josephs,
Adam HancockAnd
Archie Mitchell,Economic journalists
Getty Images
The European Parliament suspended approval of a key trade deal with the United States reached in July in protest. against Donald Trump’s demand to seize Greenland.
The suspension was announced Wednesday in Strasbourg, France, as the US president addressed the World Economic Forum in Davos.
The move follows renewed trade tensions between the United States and Europe, sparked by Trump’s attempt to acquire Greenland, which has roiled financial markets, reigniting talk of a trade war and the possibility of retaliation against the United States.
Hours later, Trump said on social media that he had reached a “framework” agreement on the future of Greenland and would not follow through on his threats to impose new tariffs on eight NATO members.
Trade tensions between the United States and Europe have eased since the two sides reached a deal at Trump’s Turnberry golf course in Scotland in July.
This agreement set US levies on most European products at 15%, down from the 30% that Trump had initially threatened as part of his “Liberation Day“Wave of customs duties in April. In exchange, Europe agreed to invest in the United States and make changes on the continent supposed to stimulate American exports.
The deal would still have required approval from the European Parliament to become official.
But on Wednesday, days after Trump threatened new U.S. tariffs on Greenland, Bernd Lange, chair of the European Parliament’s international trade committee, said she had “no alternative but to suspend work on the two Turnberry legislative proposals.”
He said work to implement the trade plans would be suspended “until the United States decides to recommit itself to a path of cooperation rather than confrontation, and before further action is taken.”
The move renewed the possibility that the EU could move forward with tariffs on a potential €93 billion ($109 billion, £81 billion) of US goods announced last year in response to Trump’s “Liberation Day” tariffs.
The country had suspended these plans while the trade deal was finalized, but these levies will now come into effect on February 7, unless the bloc decides to extend the pause or approve the new deal.
Lange, speaking before Trump announced the “framework deal” and returned to the tariff threat, said there would be “no opportunity for compromise” until Trump’s threats stopped.
He also raised the prospect of using the “anti-coercion instrument” of retaliatory measures, nicknamed the “commercial bazooka,” an idea also supported by French President Emmanuel Macron.
In an interview with the BBC after Trump’s announcement, Lange declined to say whether he could save the trade deal, adding that it would take “some time” to understand its implications.
“We need to look at what this so-called solution would mean,” he said.
In his Davos speech, Trump reiterated his interest in the United States acquiring Greenland from Denmark, but said: “I don’t need to use force, I don’t want to use force, I won’t use force.”
He called for “immediate negotiations” with the country on how it could retake the island, which he considers crucial to U.S. and global security, announcing the “framework” for a future deal hours later.
Trump’s speech helped calm financial markets on both sides of the Atlantic, which had foundered in the preceding days.
US stocks rose further following the deal announcement, with the Dow, S&P 500 and Nasdaq rising more than 1% on Wednesday afternoon, while the FTSE 100 closed slightly higher.
The price of gold continued to rise, surpassing $4,842 (£3,604) an ounce for the first time. The price of silver remained slightly below Monday’s record high of $95 an ounce, hovering around $94.
Precious metals are considered safer assets to hold during uncertain times, and the prices of gold and silver have soared over the past year.
The United States and the 27-nation European Union are each other’s largest trading partners, with more than 1.6 billion euros ($1.9 billion) worth of goods and services traded in 2024, according to European figures. This represents almost a third of all global trade.
When Trump began announcing tariffs last year, it sparked threats of retaliation from many political leaders, including in Europe.
But in the end, many chose to negotiate.
Only China and Canada maintained their threats to impose tariffs on U.S. goods, with Canada quietly withdrawing most of the measures in September over concerns they would harm the Canadian economy.
In a speech in Davos on Tuesday, Canadian Prime Minister Mark Carney urged “middle powers” to unite to fight the world of might and the right, characterized by great power rivalry, which he said was emerging.
“When we negotiate only bilaterally with a hegemon, we negotiate out of weakness. We accept what is offered to us. We compete with each other to be the most accommodating,” he warned. “It’s not sovereignty. It’s the exercise of sovereignty while accepting subordination.”
The United States has had previously expressed impatience with European progress towards approving the deal amid ongoing disagreements over tariffs on technology and metals.
But before Trump arrived in Davos, US Treasury Secretary Scott Bessent said European leaders should not rush to retaliate, urging them to “have an open mind”.
“I tell everyone to sit down. Take a deep breath. Don’t fight back,” he said.
Looming in the background of trade tensions is a pending Supreme Court ruling on the legality of many of the tariffs Trump announced last year.
