In response to President Donald Trump’s provocative tariff threats linked to the acquisition of Greenland, Europe is gearing up to deploy its most formidable economic sanctions, colloquially dubbed the ‘trade bazooka.’ This move represents the European Union’s strongest retaliatory measure in the face of escalating tensions.

Germany and France are leading the charge, preparing to introduce the proposal at the European Commission in Brussels. This initiative, known as the Anti-Coercion Instrument, is designed to provide the EU with robust defensive capabilities against external economic pressure. Five diplomats conveyed to Politico that the two nations are united in their belief that the commission must be equipped with this powerful tool.

Interestingly, there are signs that the situation might be de-escalating. In a recent address at the World Economic Forum in Davos, President Trump stated unequivocally that he has no intention of using force to acquire Greenland. “I don’t have to use force, I don’t want to use force, I won’t use force. All the United States is asking for is a place called Greenland,” he declared to attendees at the Swiss resort.

Despite this apparent softening of stance, Trump’s tariff threats remain a point of contention. The proposed tariffs target eight European countries, including the UK, France, and Germany. The plan involves a 10 percent levy from February 1, escalating to 25 percent by June, unless the US is granted the opportunity to purchase Greenland.

‘I don’t have to use force, I don’t want to use force, I won’t use force. All the United States is asking for is a place called Greenland,’ Trump said at the Swiss resort.

Trump’s tariff threat against eight European countries, including the UK, France and Germany, remains in place. He is threatening a 10 percent levy starting on February 1 and increasing to 25 percent in June, until the US is allowed to buy Greenland. 

Europe’s bazooka includes a slew of punitive tariff measures and export restrictions. The action could also exclude American companies from high-value contracts in Europe.

‘We have a set of instruments at our disposal,’ German Chancellor Friedrich Merz said earlier this week. ‘We do not want to use them. But if we have to use them, then we will.’ 

European leaders are now threatening to impose the ‘trade bazooka’ Anti-Coercion Instrument if Donald Trump doesn’t walk back his Greenland threats

President Trump gave a more tempered approach at the World Economic Forum in Davos on Wednesday, January 21, claiming: ‘I won’t use force. All the United States is asking for is a place called Greenland’

The ‘bazooka’ instrument is untested so its impacts are unknown. But US-EU bilateral trade on goods and services was about $665 billion in 2024. Broad restrictions could cause tens to hundreds of billions of dollars in annual loss on US export revenues, especially in any specifically targeted sectors.

Two EU diplomats also claim that European leaders have discussed first imposing a different retaliation package imposing tariffs on $108 billion worth of U.S. exports as the commission goes through the process of potentially launching the powerful economic weapon.

Pulling the trigger on the instrument would require the support of at least 15 countries in the EU Council.

Some European leaders have been scrambling to arrange sideline meetings with Trump during his quick stop in Davos, Switzerland for the 2026 World Economic Forum to talk him down from the Greenland threat.

Others have wanted to speak with the president to try and talk him down from imposing even more tariffs.

Trump followed up his broader European tariff threat with a warning that he could impose a whopping 200 percent tax on French wine and Champagne.

Berlin’s move to join France in backing the trade punishment against the US brings the European Union a step closer to a more forceful response to Trump’s escalated rhetoric towards Danish territory of Greenland.

‘The resolve has been there for a few days,’ one diplomat told Politico. ‘We have felt it in our bilateral talks … there is very broad support that the EU must prepare for all scenarios, and that also includes that all instruments are on the table.’ 

French President Emmanuel Macron and German Chancellor Friedrich Merz are poised to ask the European Commission at a meeting in Brussels on Thursday, January 22 to be prepared to impose the retaliatory trade action against the US

Trump insisted during his remarks in Switzerland that the US won’t need to take Greenland by force – but didn’t back off demands that the US have control of the Danish territory

But Trump’s more tempered remarks in Davos on Wednesday might have the commission pumping the breaks.

Beyond military force, Trump has floated purchasing Greenland from Denmark and some reports suggest he might offer direct payments to Greenlanders to acquire the island.

Leaders in Denmark and Greenland have repeatedly said there is no interest in the Arctic territory being handed over to the US.

Trump maintains that the US needs to take complete control of Greenland for the sake of security in the Northern Atlantic amid increasing threats from Russia and China. He says that if the US doesn’t take Greenland, then one of the foreign adversaries eventually will by use of force.