Greenland crisis ignites internal German dispute over response to Trump’s tariff threats

US President Donald Trump’s latest tariff threats, issued amidst the ongoing Greenland crisis, have sparked a heated debate within Germany and the EU over the appropriate response.

According to a report by German Foreign Policy, powerful factions within the German economy are advocating for decisive countermeasures—such as the deployment of the EU’s “trade bazooka”—while Jens Spahn, head of the CDU/CSU parliamentary group, is calling for a “level-headed response.”

The European Parliament, however, has already determined its first countermeasure and currently has no intention of ratifying a customs agreement with the US. This implies that tariffs applied to US exports to the EU will not be reduced to zero as originally planned.

“Only pressure will help”

Significant pressure is mounting on Berlin and Brussels from powerful segments of German industry to take resolute measures against the newly threatened US tariffs.

Bertram Kawlath, President of the German Engineering Federation (VDMA), stated, “Europe must not bow to blackmail,” arguing that the European Commission is obliged to examine whether it can utilize its Anti-Coercion Instrument (the “trade bazooka”). according to Kawlath, if the EU capitulates, Trump will soon voice “his next absurd demand.”

The German engineering industry has been hit particularly hard by US tariffs implemented to date, as the majority of its exports are subject to a 50% special steel tariff.

Economists and commentators are also sounding the alarm. Monika Schnitzer, Chair of the German Council of Economic Experts, noted that the current conflict is ultimately about “preserving our sovereignty as politically independent European states,” and therefore argued that a decisive response is necessary.

A commentary in the Frankfurter Allgemeine Zeitung asserted: “The only thing that helps against Trump’s policy of threats is pressure.”

Experts estimate that additional 10% tariffs would cause German economic output to contract by 0.08%.

“More important than the Arctic”

Other German industrial sectors likely to be affected by EU retaliatory tariffs on imports from the US are adopting a more cautious stance.

This applies, for instance, to the German automotive industry, which manufactures certain models in the US and delivers them to the EU from there. Federal Chancellor Friedrich Merz has noted on several occasions that his privately used BMW falls into this category.

Hildegard Müller, President of the German Association of the Automotive Industry (VDA), warned in a statement over the weekend that “unthinking reactions” would lead to “an escalation and a possible spiral that will only produce losers.”

CDU/CSU parliamentary group leader Jens Spahn (CDU) expressed a similar view. Spahn is seen in some quarters as having links to the “MAGA” movement; for example, he maintained a close relationship with the former US Ambassador to Germany, Richard Grenell.

Spahn advocates for a “cool-headed reaction,” stating, “We need each other. We must make this clear again and again in our discussions.”

Nikolas Busse, foreign policy chief at the Frankfurter Allgemeine Zeitung, signaled a willingness to give up Greenland, writing, “The Arctic is important, but the eastern flank is even more important for Europe’s security.”

Merz hesitant

Chancellor Merz, meanwhile, remains hesitant. Last week, he stated that the US “does not look at us when we make ourselves small or run away,” and therefore wanted Germany to assume a “position of strength.”

On Monday, following a meeting of the CDU federal executive committee, he announced that he would meet with Trump at the World Economic Forum in Davos on Wednesday.

“We agree that we want to prevent this dispute from escalating as much as possible,” Merz said.

The Chancellor also stated that Germany would respond calmly to the US tariff threats.

Counter-move from the EP

Manfred Weber (CSU), leader of the European People’s Party (EPP) group in the European Parliament, announced the first concrete step.

Weber explained that he, “together with other group leaders,” had decided that the Parliament would indefinitely postpone the ratification of the customs agreement with the US, which was scheduled for this week.

This means the Trump administration will not secure the “duty-free access” to the “European single market” for US industrial products envisaged in the agreement.

According to Weber, if “rules-based” cooperation is impossible, ratification is meaningless.

On the other hand, EU ambassadors, who gathered in Brussels on Sunday evening to initiate initial countermeasures, failed to reach an agreement on harsh measures, including the use of the “trade bazooka.”

Instead, they advocated for re-imposing a series of retaliatory tariffs worth €93 billion, which were prepared last year but ultimately not implemented.

They noted that a decision could be made regarding whether the Trump administration actually imposes tariffs on February 1. Details are set to be decided at a special EU summit in Brussels on Thursday.