Extract from ABC News
Donald Trump's recent tariffs on European allies over Greenland could see them retaliate with a "trade bazooka". (Reuters: Evelyn Hockstein)
A "new world order" could force Europe closer to China in the wake of US President Donald Trump's threat to expand tariffs in an escalating dispute over Greenland, experts say.
Mr Trump has vowed to impose additional 10 per cent import tariffs on eight European countries from February because of their opposition to American control of Greenland.
The Trump administration has repeatedly said Greenland was vital to US security because of its strategic location and large mineral deposits.
Experts warn it may push Europe closer to China, and potentially see Brussels use its anti-coercion instrument — also known as a "trade bazooka" — to combat the new tariffs.
The University of Sydney's Stuart Rollo, whose research focuses on the US–China relationship, said the Trump administration alienating Europe was short-sighted.
"The US could be really seriously overplaying its hand by thinking they can kick Europe around forever,"Dr Rollo said.
"And it will just never explore closer relations with a country like China that are actually not really national security threats to them at all."
What are the current tariffs on the eight European countries?
The US has threatened to impose the new 10 per cent tariffs on Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Great Britain.
Those tariffs would come into effect on February 1.
The import tariffs would increase to 25 per cent on June 1, and would continue until a deal was reached for the US to purchase Greenland — a vast Arctic island that is part of the Kingdom of Denmark.
All of the countries, except for the United Kingdom, were previously covered by the EU–US trade pact negotiated last year, which saw most goods exported to the US hit with a 15 per cent tariff.
The United Kingdom struck a deal for a lower tariff rate of 10 per cent.
In response to the threat of additional tariffs, the eight European countries issued a joint statement, saying they were standing in solidarity with Denmark and Greenland following the Trump administration's threat to annex the Arctic island.
"As members of NATO, we are committed to strengthening Arctic security as a shared transatlantic interest," Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and Britain said in the statement.
"Tariff threats undermine transatlantic relations and risk a dangerous downward spiral."
People in Greenland protest against US President Donald Trump's push to take control of the Arctic island. (Reuters: Marko Djurica )
Monash University economist Robert Brooks said the conversation on the use of tariffs in trade had developed as countries needed to protect domestic industries to manage supply chains and national security issues.
But the Trump administration's use of tariffs went beyond that, he said.
"It's very unusual in the modern world to see trade policy used in this way. And so that's an undesirable thing because it creates uncertainty," he said.
"It also means what confidence do you have in the deals that you have done?"
How damaging would further tariffs be on Europe?
The world's largest trade and investment relationship is between the European Union and the US.
In 2023, the trade of both goods and services between the two reached 1.6 trillion euros ($2.78 trillion).
The United Kingdom also has a close trading relationship. In 2024, the US was its largest export partner and third-largest import partner for goods.
Economist Richard Holden from the University of New South Wales questioned the lengths the Trump administration could go in its most recent trade dispute with Europe.
"Where does President Trump go from here?" he asked.
"Would he be willing to essentially stop all trade between the United States and Europe?"
He said a pause in trade would hurt Europe more than the US, because the EU was heavily reliant on the US for digital products and services.
The European Parliament found more than two-thirds of the EU market for cloud infrastructure was held by Amazon, Microsoft and Google.
In addition, 80 per cent of EU corporate spending on software went to US vendors.
"The United States is really the only country in the world that can be borderline self-sufficient. Now it's not in their economic interest to do so," he said.
New tariffs could see EU use 'trade bazooka'
On Thursday, European leaders are expected to discuss how they respond to the new tariff threat from the Trump administration.
One option is its "Anti-Coercion Instrument" (ACI), which would limit US access to the EU's market.
EU leaders are expected to meet on Thursday to discuss plans to respond to the Trump administration's tariffs. (Reuters: Yves Herman)
The framework, also referred to as a "trade bazooka", allows the EU to take action against countries in cases of economic coercion.
"Under the regulation, 'economic coercion' refers to a situation whereby a third country seeks to pressure the European Union or an EU Member State into making a particular choice by applying, or threatening to apply, measures affecting trade or investment," the policy reads.
Professor Brooks said the trade bazooka was first developed during the coronavirus pandemic.
"The reason it gets colloquially referred to as a trade bazooka is it enables them to take retaliatory measures," he said.
But Professor Holden was not convinced how effective it would be against the US in a potential trade war.
"I'm not sure, I'd call it a [trade] bazooka,"he said.
"I'm not sure how painful it'd be for the United States. So I'm a little sceptical of that."
Will Trump's tariffs start a 'new world order'?
Dr Rollo said if adopted, Mr Trump's latest tariffs on Europe could see ties between Europe and China grow closer.
It comes after a new trade deal between China and Canada, where Prime Minister Mark Carney said the deal represented a "new world order" as it looked to recalibrate its relationship with Beijing.
"We take the world as it is — not as we wish it to be,"Mr Carney said.
Mark Carney meets with Xi Jinping at the Great Hall of the People in Beijing in January. (AP: Sean Kilpatrick/The Canadian Press)
Dr Rollo explained Mr Carney was referring to the liberal international rules-based order established after World War II, which was led by the US.
"If Trump actually enforces these [tariffs] it could result in a serious recalibration of how these traditional American allies like Europe see their national interests and the world stage," he said.
"The US could turn on or off Canada's access to China in a heartbeat if it really needed to come down to it. The EU is not like that.
"So in the long run, the US is going to have a much more difficult time telling [Europe] what to do."
Professor Holden said trading blocs excluding the US have already been established in response to the so-called Liberation Day tariffs.
"This would push folks further in that direction," he said.
"Once people conclude that the US is not a reliable economic partner, people have to look elsewhere."
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