Germany Faces Heightened Economic Vulnerability Amid Trump's Tariff Pressures and Greenland Dispute

At the 2026 World Economic Forum in Davos, US President Donald Trump reignited tensions by demanding immediate negotiations on the acquisition of Greenland, a Danish territory. Trump argued that only the US could guarantee Greenland's security, underscoring his America-First agenda and emphasizing the island's strategic importance for national and global security. Despite his claims, NATO Secretary General Mark Rutte cautioned against diverting attention from the core security threat posed by Russia's invasion of Ukraine, while UK Prime Minister Keir Starmer firmly rejected Trump's tariff threats related to Greenland, asserting the UK's resolve not to acquiesce.

Economist Markus Jaeger of Columbia University and the German Council on Foreign Relations warned of Germany's distinct economic vulnerability in this fraught environment due to its high export orientation, ongoing economic stagnation, and rising competition from China. He pointed out that Trump utilizes tariffs as a political weapon aimed at European governments, with potential escalation through export controls on critical technologies such as cloud computing services essential to companies like Dropbox and Google Drive. While financial sanctions on European firms and banks remain less likely, the threat persists.

Jaeger urged Germany and the broader European Union to respond firmly to any future US tariff threats, highlighting the EU's newly established anti-coercion instrument that could serve as a retaliatory framework. Such decisive resistance might force the US to reconsider its stance and could help de-escalate tensions. However, Jaeger expressed concerns about a lasting rift in transatlantic relations if an America-First candidate like Vice President J.D. Vance wins the 2028 US presidential elections, potentially accelerating US disengagement from international cooperation.

Trump's delayed arrival in Davos due to an Air Force One malfunction did not diminish the weight of his speech, which criticized Europe's focus on mass immigration and renewable energy, claiming these trends threaten the continent's direction. His stance continues to challenge Europe's economic and diplomatic stability, prompting calls from European leaders for a balance of firmness and diplomacy in confronting the US's assertive economic policies.

Overall, Germany and Europe face complex challenges as they navigate the intersection of security disputes like Greenland, aggressive US tariff policies, and the broader geopolitical landscape reshaped by US domestic political dynamics.