France’s finance minister has warned that US moves to seize Greenland could damage trade relations with the European Union, as one analyst told CNBC that tariffs and sanctions could lead to a “trade war.”
US President Donald Trump has stepped up his talk this month of annexing Greenland, and has not ruled out the possibility of an armed occupation. Talks between the United States, Denmark and Greenland over the future of the world’s largest island ended on Wednesday without any diplomatic progress.
French Finance Minister Laurent Lescure told the Financial Times on Friday that economic ties between the United States and Europe could be harmed if President Trump moves to seize the autonomous Danish territory.
“Greenland is a sovereign part of a sovereign country that is part of the EU. We should not mess with it,” he said.
Asked whether the EU would impose economic sanctions if the US invaded Greenland, Lescure told the FT: “I’m not going there. I mean, of course, if that were to happen, we would certainly be in a whole new world and we would have to adapt accordingly.”
His comments came as a Democratic-led US delegation is scheduled to visit Copenhagen for talks with Danish parliamentarians on Friday.
President Trump has said the United States needs Greenland for national security reasons. Analysts told CNBC that it wants to lock out rivals from mining minerals vital to emerging trade routes and, in some cases, industries such as defense.
Dan Alamarieu, chief geopolitical strategist at Alpine Macro, told CNBC in an email that “significant” economic pressure on Denmark in the form of tariffs or sanctions by the U.S. “could mean a significant backlash from the EU, which could respond in kind, leading to a kind of trade war with the U.S., which is always a headline risk.”
“That would disrupt the market,” he says. “It would also call into question NATO, but we do not expect this to happen or for NATO to break up. Domestic politics and market backlash will likely ease any such pressure from the Trump administration.”
Meanwhile, European troops arrived in Greenland late Thursday for joint military exercises.
This shows the U.S. “this is primarily an ally effort,” Maria Martisciuto, a policy analyst at the European Policy Center, told CNBC’s “Squawk Box Europe” on Friday. “If we want to strengthen our military and defense capabilities in Greenland and across the Arctic, it’s not up to the United States; it’s through the efforts of our allies.”
He said the exercise, coupled with European leaders outlining non-negotiable red lines, could “send a strong message”, adding: “It remains to be seen how the US will proceed in this regard.”
The European Commission, the EU’s executive arm, proposed doubling spending on Greenland in its latest budget proposal.
European Commission President Ursula von der Leyen said Thursday: “It is clear that Greenland can trust us politically, economically, financially and with security.”
