Trump's Greenland gamble: Tariffs and trade war tactics

The world's largest island, inhabited by about 58,000 people, has captured global attention due to Donald Trump's announcements. The President-elect declared that the United States wants to purchase Greenland, an autonomous territory of Denmark.

Americans considered purchasing Greenland during Abraham Lincoln's presidency in the 19th century. At that time, the idea was abandoned, partly because it was believed there were no attractive resources on the island.

Meanwhile, Greenland holds enormous geopolitical and energy significance. "Of the 34 resources identified by the European Commission as strategically important for Europe's industry and green transformation, 25 can be mined in satisfactory quantities in Greenland," wrote Jakub Wiech from energetyka24.com on the X platform.

In 1946, the U.S. offered Denmark $100 million for the island. Just six years ago, Trump offered money for Greenland. Now, he's warning that he will impose high tariffs on Denmark if it doesn't sell the island.

"Trump wants to provoke a trade war. Introducing tariffs is one of his main election promises, but according to the current Trade Act of 1974, the President lacks the unilateral authority to manipulate tariffs. The exception is a provision allowing the President to take necessary actions against policies that burden U.S. trade," says Rafał Michalski.

This means that if the U.S. President decides a third country's economic practice threatens the country's trade, he is empowered to remove that burden.

"Trump invoked this provision during his first term in the trade war with China. He claimed that Beijing's economic practices burden U.S. trade, justifying his ability to manipulate tariffs to avert this risk. However, this provision doesn't work effectively, especially with European allies," explains Michalski.

In this context, Greenland and the threats of imposing tariffs on Denmark are relevant.

If Trump starts to suggest in the media that he broadly understands the definition of a threat to U.S. interests, he may consider that the lack of full access to this island threatens national security, explains the Americanist.

And this security could be threatened by Russian and Chinese ships sailing in the Norwegian Sea. Trump assessed that the U.S. needs Greenland for national security. "It's for the free world. I'm talking about protecting the free world," Trump declared. "You don't even need binoculars—just look outside and see all the ships from China. You have Russian ships everywhere. We will not allow it."

According to Dr. Michał Kuź from Łazarski University, Trump is utilizing the doctrine of the so-called unpredictable leader in this scenario. He wants to create the impression that he is willing to take drastic steps to start negotiations from a stronger position.

"These are actions characteristic of aggressive business dealings behind closed doors, but they cause a stir when used in diplomacy. Trump's style is transactional—characterized by low trust in international institutions and a preference for bilateral agreements. For him, politics is a business where negotiations begin with a firm stance, followed by reducing demands. This is how he communicates with partners. Meanwhile, he often compliments adversaries, which costs nothing, and then sets tough conditions," explains the international relations expert.

That's why, even before being sworn in, Trump threatened to impose tariffs not only on Denmark but primarily on China, Canada, Mexico, the EU, and BRICS countries. He also believes Panama charges too high fees for using the Panama Canal.

"When talking about Canada, Greenland, and Mexico, Trump evokes the Monroe Doctrine, asserting that the entire Americas should be a special sphere of influence for the U.S., including Greenland due to its continental shelf," adds Kuź.

However, Greenland is significant concerning Mexico, where Trump's interest is also focused. Trump recalls the "Alien and Sedition Acts" from the 18th century, which limited immigration.

The President can declare a state of emergency due to illegal immigration from Mexico, which Trump considers an invasion of a foreign army, thus justifying, for example, using the military for deportations - assesses Michalski.

The Americanist notes that Trump is eyeing Arizona, North Carolina, and Texas, which suffered after the implementation of the NAFTA agreement. "Uncontrolled imports of agricultural products from Mexico began, causing an industrial collapse. The southern provinces lost significantly. Trump knows this; he has voters there, and they want specific and strong regulations in some sectors of the economy. Trump is looking for a pretext to invoke these exceptional rules and will persistently highlight the threat," believes Michalski.

In the context of Greenland, there are Chinese and Russian ships, while from Canada and Mexico come immigrants and drugs, especially fentanyl, to the U.S.

According to Politico, the tariffs proposed by Trump on Canada and Mexico could impact goods worth over $900 billion. This involves cars, their parts, and the energy sector. "Both countries account for nearly one-third of U.S. goods imports, which last year amounted to approximately $3.1 trillion."

Trump jokes that Canada could become the 51st state of the U.S., but he undoubtedly can exert economic pressure on the neighbor, as he tends toward concessions.

"Trump talks about universal tariffs, but even in his first term, he often retreated. At that time, the New England states asked him to exclude products from higher tariffs for their key steel industry. And he complied," Michalski recalls.

Unexpectedly, Mark Zuckerberg joined Trump's team, at least temporarily. Meta's founder announced the end of its fact-checking program with partners and plans to introduce a community notes system similar to Elon's X platform. Meanwhile, he will transfer content moderators from leftist California to Republican Texas.

"The decision to change the approach to content moderation resulted from criticism Meta received from Republicans, who believed the fact-checking system favored Democrats. The new system, similar to the one used by X, aims to be more open to various community opinions," reported finanse.wp.pl.

Zuckerberg sensed the changing political winds and is attempting to get closer to Trump's administration. Recently, Meta announced Joel Kaplan, a Republican lobbyist, as the global policy head for the giant, and Trump's friend and former UFC head (an MMA organization) Dana White joined the board.

Meta's CEO has issues with the EU. Last fall, the European Commission fined Meta nearly 800 million euros for unfair trade practices on the Facebook Marketplace platform. Google and Apple are also on Brussels' radar. Musk's influence on Trump could lead the White House to advocate for Silicon Valley giants in the EU. Trump has already warned Brussels that he will impose tariffs on its goods if it doesn't increase purchases of American oil and gas. The U.S. is the largest producer of oil and LNG exporter.

"The EU will compromise because it must. Brussels hasn't developed its digital technology or social media centers. No one will suddenly shut down Twitter. China has TikTok, and Russia has Telegram. Even Blue Sky, an alternative to X, is American," believes Kuź.

The expert assesses that in negotiations with Trump, the EU will have to propose deregulation in the social media market, increase oil and gas purchases from the U.S., and raise defense spending.

"The EU is attempting to implement data protection regulations, but Trump may argue that his administration opposes such regulations on their capital, seeing them as burdens on U.S. trade. This outlines a potential economic conflict with the EU," adds Michalski.

Both experts emphasize the importance of transactional approaches in Trump's politics. Over the coming years, Argentina, where Elon Musk-admired Javier Milei governs, may benefit from cooperation with his administration.

"Trump understands tough business, but he shouldn't be insulted. I wouldn't want to be in the same room with Trump and Donald Tusk, who claimed Trump is a Russian agent. That conversation, if it ever happens, would be tense," concludes Kuź.

Piotr Bera