Dear Readers,
Over the past two weeks, Donald Trump’s claim on Greenland and the tariff threats linked to it have dominated debates in Europe, from Davos to the special European Council meeting. While some of the most explicit threats have since been toned down, the episode remains a watershed moment. On Sunday, I discussed on Caren Miosga what the recent escalation has revealed about the EU’s capacity to act, and what the parallel pressure from Washington and Moscow now demands of Europe.
Despite the US walk-back, the central challenge for Europe is to remain clear about what was at stake – and may well be again. As my colleague Brandon Bohrn argues in a recent interview, the fact that acquiring Greenland was put on the table at all has lasting consequences for the transatlantic relationship. It reflects a familiar Trump pattern: opening with maximalist, shock-inducing demands, followed by a tactical retreat and a negotiated outcome in which short-term US gains take precedence over the value of long-standing alliances. At the same time, the episode also showed that Europe can respond effectively when it acts with a united front and is prepared to use its leverage.
The EU’s Anti-Coercion Instrument (ACI) provides a concrete framework for doing so. With the immediate tariff threat withdrawn, the European Council did not move toward activation, but the crisis nonetheless sharpened discussions about the conditions under which the ACI would need to be triggered. However, the risk remains that Europe continues to underestimate its own leverage, from market access and intellectual property to key technologies.
These external pressures coincide with demanding internal transformations. The expansion of carbon pricing to buildings and transport under ETS2 starting in 2028 illustrates how closely Europe’s strategic resilience is tied to social cohesion. As my colleagues Thomas Schwab and Sara Hagemann show, most households can absorb higher heating costs, but low-income and elderly homeowners face particular strain. Social Climate Plans can mitigate the impact, yet the challenge of shifting away from fossil fuels while maintaining public support remains.
As the Trump agenda floods European debates, Europe must ensure that other crises, above all the war against Ukraine, are not lost from view on either side of the Atlantic. Similarly, developments in Iran, amid the largest wave of nationwide protests since 2022, also continue to demand attention as my colleague Christian Hanelt discussed in a recent interview.
Best wishes,
Daniela Schwarzer
Member of the Executive Board
