The European Parliament has paused approval of a major trade agreement with the United States, deepening tensions across the Atlantic following renewed remarks by US President Donald Trump about acquiring Greenland. The decision signals growing European concern over what lawmakers see as coercive trade behaviour and erratic diplomacy from Washington, even as global markets remain relatively steady.
The agreement, reached in principle in July during negotiations at Trump’s Turnberry golf resort in Scotland, aimed to resolve a year-long tariff standoff between the world’s two largest trading partners. It would have reduced US tariffs on most European goods to 15 percent, down from the 30 percent initially threatened. In exchange, the European Union pledged increased investment in the US and regulatory adjustments to support American exports.
However, the deal required formal ratification by the European Parliament—a process now suspended.
Speaking in Strasbourg, Bernd Lange, chair of the Parliament’s International Trade Committee, said lawmakers had “no alternative” but to halt work on the agreement after Trump linked fresh tariff threats to the Greenland issue. The announcement coincided with Trump’s speech at the World Economic Forum in Davos, underscoring the political weight of the move.
Trump’s renewed insistence that the US should take control of Greenland—a territory belonging to Denmark, a NATO ally—unsettled European governments and briefly shook financial markets. Although the president later claimed progress toward a “framework” understanding on Greenland and stepped back from immediate tariff threats against several NATO members, officials in Brussels remained sceptical, viewing the shift as tactical rather than substantive.
The suspension reopens the possibility of EU retaliation, including tariffs on up to €93 billion worth of US goods. These measures, unveiled last year in response to earlier American tariffs, were frozen while talks continued. Unless the EU extends the pause or revives the trade deal, the tariffs could take effect as early as February, raising fears of a renewed trade conflict.
European leaders have also signalled they may turn to the bloc’s anti-coercion instrument—a powerful mechanism designed to counter economic pressure from foreign governments. French President Emmanuel Macron has previously supported its use, indicating a tougher European response if US threats persist.
Despite the diplomatic fallout, markets reacted calmly after Trump’s announcement of a Greenland framework, with US and European stocks posting gains. Analysts note that investors have increasingly discounted the president’s rhetoric, giving rise to the phrase “Trump Always Chickens Out” to describe a pattern of aggressive threats followed by compromise.
Still, the stakes remain high. The US and EU together account for nearly one-third of global trade, exchanging more than €1.6 trillion in goods and services each year. Any prolonged disruption to this relationship could have significant global economic repercussions.
For now, the trade agreement remains stalled. European lawmakers say progress will depend on a clear move away from confrontation and toward cooperation. As one EU official privately remarked, patience in Brussels is running out. In a period of fragile global growth and intensifying geopolitical competition, the standoff illustrates how quickly economic alliances can become entangled in political ambition.
