U.S. President Donald Trump signaled additional tariffs against eight European countries opposing the U.S. plan to annex Greenland, raising expectations that this could roil U.S. consumer prices.
Earlier, on the 17th (local time), the president wrote on the social network Truth Social, naming eight countries—Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland—and said, "These countries, which are playing a very dangerous game, have created an unacceptable and unsustainable level of risk." He said he would impose a 10% tariff on these countries starting on the 1st of next month and raise the tariff rate to 25% starting on June 1.
Under trade agreements the United States reached separately last year with the European Union (EU) and the United Kingdom, the U.S. imposes a 15% tariff on EU imports and a 10% tariff on British goods. The president did not specify how the tariff would be applied, but the newly released tariff is likely to be added on top of existing tariffs. Jamieson Greer, head of the U.S. Trade Representative (USTR), said, "If they want to make this issue (Greenland) a point of contention in trade talks, that is their choice; it is not our problem."
In this regard, the Wall Street Journal (WSJ) reported on the 18th that "the president's threat to impose an additional 10% tariff on European allies is likely to affect various luxury and specialty goods." Major products currently imported from Europe to the United States include French wine and cheese, Norwegian salmon, and Bang & Olufsen speakers assembled in Denmark. If the additional tariffs are actually imposed as signaled, consumer prices for these products in the U.S. will likely rise.
In addition, major consumer brands are unlikely to avoid the impact of the tariffs, as a substantial portion of their core production facilities are in Europe, including luxury fashion brands such as Louis Vuitton and Hermès, Germany's luxury camera brand Leica, and France's premium kitchenware brand Le Creuset.
Europe is also a major production base for high value-added products supplied to the United States. Germany is well known for premium car brands such as Volkswagen, Audi and Porsche, and last year alone it exported $19.4 billion worth of cars to the U.S. Sweden is represented by Volvo, and France by Airbus aircraft. Although many components are sourced worldwide, final assembly and precision engineering still often take place in Europe, meaning cars and aircraft could also be subject to U.S.-bound tariffs.
The United States also imports a significant amount of pharmaceuticals from Europe. According to the WSJ, during the COVID-19 pandemic the U.S. brought in vaccines produced in Belgium and Germany. Last year, U.S. imports of bulk medicines and vaccines and other pharmaceuticals from Germany reached $18 billion (about 27 trillion won), and it imported more than a total of $9.2 billion (about 14 trillion won) in pharmaceuticals from France.
European countries are pushing back against the president's tariff threat and are reviewing the activation of the Anti-Coercion Instrument (ACI), known as a "trade bazooka." Outlets including the BBC, citing sources at the Élysée Palace, reported that President Emmanuel Macron is contacting leaders of major European countries and plans to formally pursue activation of the ACI. The ACI allows restrictions on trade in services, foreign direct investment, financial markets, public procurement and intellectual property against third countries that economically pressure the EU or its member states.
CNN projected that "with the president recently floating tariffs over the Greenland issue and Europe likely to respond with countermeasures, import prices could surge and weigh on both the U.S. and European economies."