Istanbul/London – International credit rating agency Fitch Ratings issued a stark assessment on Monday, January 19, 2026, stating that US President Donald Trump's threat to impose escalating tariffs on several European allies over their resistance to Washington's push to acquire Greenland has significantly elevated geopolitical risks in Europe. The warning underscores deepening transatlantic strains at a time when NATO unity faces unprecedented challenges amid Arctic security concerns and broader global tensions.
In its statement titled "US Threat of Greenland Tariffs Raises European Geopolitical Risks," Fitch described the tariff proposal as a "serious upsurge in transatlantic tensions." The agency noted that while the implementation of such measures remains highly uncertain and subject to intense discussions, the mere threat signals a potential cycle of retaliation that could undermine trade, economic growth, and collective defense commitments. "The threat of Greenland-related US tariffs on European allies and European retaliatory measures... signifies a serious upsurge in transatlantic tensions, increasing pressure in Europe to raise defense spending, posing risks to trade and growth, and weakening deterrence against future Russian aggression," Fitch stated.
The controversy stems from President Trump's announcement on Saturday, January 17, 2026, via his Truth Social platform. He declared that the United States would impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland starting February 1, 2026. The rate would rise to 25% on June 1 and remain in effect "until such time as a Deal is reached for the Complete and Total purchase of Greenland" by the US. Trump framed the acquisition as essential for national security, citing the island's strategic Arctic location, vast mineral resources (including rare earth elements critical for technology and defense), and the need to counter alleged growing Russian and Chinese influence in the region.
Trump has repeatedly emphasized that only US control can safeguard Greenland from external threats, arguing that neither Denmark nor Greenland possesses the military capacity for adequate defense. He has not ruled out other means to achieve this goal, reviving his 2019 interest in purchasing the territory and escalating rhetoric in early 2026 amid renewed Arctic militarization.
European leaders responded swiftly and unitedly. On Sunday, January 18, 2026, the eight targeted countries—Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland—issued a joint statement denouncing the tariff threat as unacceptable coercion. "Tariff threats undermine transatlantic relations and risk a dangerous downward spiral," the leaders declared, reaffirming full solidarity with Denmark and the people of Greenland while committing to uphold sovereignty, territorial integrity, and shared Arctic security interests. The statement highlighted ongoing military exercises like Denmark-led Arctic Endurance, which involve limited troop deployments from these nations to bolster regional presence without posing threats to others.
EU institutions echoed this stance. European Commission President Ursula von der Leyen and European Council President António Costa expressed solidarity with Denmark and Greenland, warning that such measures would harm shared prosperity. EU ambassadors convened an emergency session in Brussels on Sunday to coordinate responses, discussing potential activation of the bloc's Anti-Coercion Instrument—a "trade bazooka" prepared in May 2025 that could target up to €95 billion ($110.6 billion) in US imports through countermeasures like market access restrictions or export controls. Despite preparations, Fitch anticipates the EU's response would remain "fairly muted" due to overriding security concerns and reluctance to further erode US defense commitments.
Fitch analyzed potential economic fallout. Assuming tariffs are additional to existing ones, a 10% levy could reduce European GDP by approximately 0.5% by the end of 2027 relative to baseline forecasts, with a 25% rate roughly doubling that impact. Effects would vary by trade exposure: export-dependent economies like Germany and the Netherlands face higher risks, while consumer prices in the US would likely rise. The agency emphasized that tariffs would primarily burden American consumers and businesses reliant on European imports.
Beyond direct trade hits, Fitch identified the principal credit risk as erosion of NATO's credibility. A weakened alliance could diminish deterrence against Russia, particularly for eastern and northern European states bordering or near Russian territory. "The main risk to countries’ credit ratings from rising transatlantic tensions is that NATO’s sustainability and the credibility of collective defense commitments could weaken," the statement read. Fitch previously warned that fracturing NATO over Greenland could prompt one-notch downgrades for vulnerable sovereigns, with proximity to Russia as a key factor. Denmark's credit profile, however, remains robust—its general government debt-to-GDP ratio below 30% and strong public finances shield it from direct downgrades, though secondary political and geostrategic pressures loom.
The dispute has amplified calls for higher European defense spending. Fitch observed that eastern and northern European countries, along with Germany, are already accelerating increases, and recent events could hasten this trend. Nations facing less immediate threats may see slower rises, but overall momentum toward meeting or exceeding NATO's 2% GDP target is likely to grow amid doubts over US reliability.
Greenland, an autonomous territory under the Kingdom of Denmark since the 2009 Self-Government Act, controls its resources and internal affairs but relies on Denmark for defense and foreign policy. Greenlandic Prime Minister Jens-Frederik Nielsen and Danish Prime Minister Mette Frederiksen have firmly rejected any sale, with widespread public protests in Nuuk emphasizing self-determination. Frederiksen has warned that US coercion could undermine NATO itself.
As discussions continue ahead of potential tariff implementation, Fitch's analysis highlights the delicate balance: European leaders seek de-escalation to preserve alliance cohesion while defending core principles. The crisis tests transatlantic ties at a pivotal moment, with implications for global security, trade stability, and creditworthiness across the continent.
