BRUSSELS—European leaders racing to respond to the threat of U.S. tariffs for opposing President Trump ’s plan to take control of Greenland have an arsenal of options, including trade retaliation, reducing defense ties and a “bazooka” to defend against economic coercion.
Individually, the nations Trump has threatened with economic measures can do little about his 10% tariffs , but as a unit they could raise the cost of using the levies to extract concessions on Greenland, a semiautonomous Danish territory.
The European Union already has a list of U.S. goods worth more than $100 billion on which it could impose retaliatory tariffs. The bloc also has the power to withhold key parts of its trade agreement with the U.S., which Trump has called “a giant deal.”
In crisis talks Sunday, EU ambassadors also discussed using a never-before-deployed tool—often dubbed the bazooka—that allows them to fight back when under economic duress from another country.
The ambassadors didn’t reach a decision on which route to pursue. Diplomats said there is still time for talks with the U.S. and internal discussions before the bloc decides how to respond.
European leaders are set to meet to discuss the matter later this week, after the start of the World Economic Forum that Trump is expected to attend in Davos, Switzerland.
When Trump announced his “Liberation Day” tariffs last year, European leaders, many of them NATO allies, hesitated to strike back, hoping to keep him involved in the military alliance and especially in Ukraine’s defense. But the president’s decision to tie trade so overtly to security is driving them to reassess.
“There is a sense this time around that the EU has to respond—that the price they are paying for U.S. support in the NATO and Ukraine context is getting too high,” said Mujtaba Rahman , managing director for Europe at Eurasia Group, a risk-management consulting firm.
Still, the EU is unlikely to make any major moves before the new tariffs take effect, he added, which Trump said would be on Feb. 1.
Here are some of the bloc’s options:
Hold off on cutting tariffs to zero for many U.S. goods
The EU, a single economic bloc of 450 million consumers, is America’s largest regional trading partner .
Last summer, the bloc agreed to a lopsided trade deal with the U.S. that included a 15% duty for most EU goods imported to the U.S., and a plan to eliminate existing tariffs on many American products entering EU borders.
The European Parliament still has to approve that reduction. The president’s tariff threat on Saturday prompted some of the Parliament’s most powerful political groups to call for the ratification process to be put on hold.
Impose new, retaliatory tariffs on some U.S. products
The EU drew up a list of American products worth more than $100 billion on which it could impose retaliatory tariffs in response to Trump’s tariff moves last year. The list included chewing gum, motorcycles and peanut butter . It was put on hold temporarily last year but is due to kick in on Feb. 7 unless the bloc takes steps to extend the suspension.
If Trump goes ahead with 10% tariffs on some EU members on Feb. 1, the EU could respond by allowing the suspension to lapse, triggering tariffs on U.S. products.
Retaliation would risk angering the Trump administration and sparking tit-for-tat escalation. But economic action over Greenland, analysts said, might be enough to push the bloc to fight back with tariffs of its own.
Use the anticoercion trade tool dubbed the bazooka
The EU’s bazooka trade tool in principle would give the bloc significant leeway to implement export controls, place tariffs on services, restrict intellectual-property rights and curb American companies’ ability to bid on public contracts in Europe, among other measures.
It stems from an EU regulation that took effect more than two years ago but has never been used to impose trade measures. Under the law, the EU can formally deem another country’s actions to be economic coercion—a step that would open the door to a wide arsenal of economic responses if the alleged coercion doesn’t stop.
“If there is one circumstance that would absolutely justify the triggering of the anticoercion instrument, this is it,” said Ignacio García Bercero, a former EU trade official, referring to Trump’s Greenland tariff threat.
For the tool to be invoked against the U.S., the European Commission, the EU’s executive arm, would need approval from just over half of all member states, which must also be home to at least 65% of the overall population of the bloc. But for the move to be politically acceptable, it would require even more support than that, an EU diplomat said Sunday.
Once in place, the tool would allow the EU to more easily calibrate its trade response.
Beef up defense, close U.S. bases
Some EU leaders, many of them North Atlantic Treaty Organization members, worry that if the bloc allows Trump to take control of Greenland, other European territories could be next. It also risks the sanctity of the military alliance , and has implications for Ukraine in the face of Russia’s invasion.
Europe could expand its military presence in Greenland, accelerate its plans to spend more on defense or shift some military hardware purchases away from the U.S. But many critical weapons and military systems are only made in America, and Europe is struggling to strengthen its own military-industrial base.
An extreme option for Europe would be to limit or terminate U.S. use of military bases across Europe, such as the vast Ramstein Air Base in Germany, which employs more than 12,000 U.S. servicemembers and civilians. This response would dramatically escalate tensions and could prompt Trump to pull U.S. forces from the continent—something neither side says it wants now.
Increase cooperation with the rest of the world
Trump’s tariffs have already reinvigorated the bloc’s interest in trade deals with other countries, as it looks to reduce reliance on the U.S. The EU signed a trade pact with four South American countries on Saturday—the same day Trump threatened new tariffs over Greenland—and the bloc hopes to announce a trade agreement with India as soon as this month. Such a deal with Australia is also possible.
The latest Trump threat could also prompt the EU to rethink what it calls a derisking strategy with China, under which the bloc has taken a tougher stance on imports of subsidized Chinese products and China’s restrictions on European businesses.
Write to Kim Mackrael at kim.mackrael@wsj.com
