A lot will turn on what happens inside the room when the leaders of the European Union’s 27 states meet in Brussels for an emergency summit on Thursday.
The Irish Government, which has been one of the loudest voices for restraint in the face of threats from US president Donald Trump during his second term, might find the argument against tougher retaliation does not land as it did during EU-US tariff negotiations last year.
Taoiseach Micheál Martin will have to walk a fine line. A trade war, or worse, between Europe and the US would be particularly devastating for the Republic, given its close trade ties with Washington, and the concentration of US multinational tech and pharma firms in the State.
French president Emmanuel Macron is expected to push for the EU to hit back hard, using emergency anti-coercion powers, to put some pressure on Trump. The so-called “big bazooka” would allow the European Commission to partially restrict the ability of US companies to operate in the EU market.
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Martin will probably have an ally in Italian prime minister Giorgia Meloni, who has been another opponent of any response that would further antagonise the White House. The stance taken by German chancellor Friedrich Merz will be one to watch.
It is rare for such an emergency gathering of EU leaders to be called. One occurred after Russia launched its full-scale invasion of Ukraine in 2022, and others took place during the Covid-19 pandemic and the Brexit negotiations.
It is safe to assume other leaders will take some guidance from Denmark’s prime minister Mette Frederiksen. Until now the Danish government had been trying to take the political heat out of the Greenland dispute, in the hope that Trump could be convinced the US does not need to own the island to shore up its security interests in the Arctic region.
Frederiksen, a formidable politician, has been preparing for Trump to make a second run at taking control of Greenland. However, the strength of the US president’s language, his threats of using military force and new tariffs possibly being levied on Denmark and other European allies will surely have surprised the Danish leader.
Davos should provide an opportunity for some EU leaders to speak to Trump on the margins of the World Economic Forum this week. How those talks go will inform the EU leaders’ discussions on Thursday.
A middle-ground option being considered would see the EU hit €93 billion worth of US goods, from soybeans to Harley Davidson motorbikes, with retaliatory tariffs. That would take us back to the brinkmanship of last July, before an EU-US tariff deal was agreed.
The status of that agreement is up in the air. The main political groupings in the European Parliament are expected to delay a vote to ratify the deal.
The feeling within EU governments at the time was that sucking up 15 per cent tariffs on future US trade was a high but acceptable price to pay to avoid a trade war.
Trump’s latest threats of additional tariffs on Denmark and other allies would effectively rip up that agreement.
China’s approach of responding to US tariffs with similarly steep import duties from Beijing shows Trump can back down in the face of pressure.
[ Donald Trump taking control of Greenland could smash the western allianceOpens in new window ]
Whether the EU has the bottle, and political unity, to increase the pressure and absorb the possible painful US reaction that initially follows, is an open question.
The Government may find itself seeking sympathy for its unique exposure to an escalating transatlantic trade fight, from the same governments - Germany, Spain and others - which very recently found Ireland wanting when they asked for support on the EU-Mercosur deal.
