By Chinonyerem Emmanuel
German industry leaders reacted with sharp anger and alarm on Sunday after U.S. President Donald Trump signaled plans to deploy punitive tariffs against European allies in a bid to pressure Denmark into selling Greenland, a move critics say dangerously weaponizes trade policy for geopolitical ends.
The threat, which would see escalating tariffs imposed on European goods until Washington is granted permission to purchase the strategically vital Arctic island, has jolted businesses just months after a fragile sense of stability returned to transatlantic trade relations.
That calm followed a trade agreement reached between Brussels and Washington last summer, which had temporarily eased years of tariff-driven uncertainty.
For Germany, Europe’s largest economy and one of the world’s most export-dependent industrial powers, the stakes could hardly be higher. After two consecutive years of economic contraction, German manufacturers are only beginning to emerge from a prolonged slowdown, still weighed down by weak global demand and lingering trade frictions. Key export sectors such as automobiles, machinery and chemicals remain especially exposed to any new escalation.
“If the EU gives in here, it will only embolden the U.S. president to make the next absurd demand and back it with further tariff threats,” warned Bertram Kawlath, president of the German engineering association VDMA. “This sets a dangerous precedent.”
Volker Treier, foreign trade expert at the German Chamber of Commerce and Industry, echoed those concerns, condemning what he described as an unacceptable fusion of politics and economic punishment. “Highly controversial political objectives are being enforced through economic sanctions. That crosses a line,” he said.
Exporters Urge Brussels to Stand Firm
German industry groups are now urging the European Union to respond forcefully and in unity. Their calls follow similar remarks from the head of Germany’s powerful automotive association, who spoke out on Saturday against yielding to U.S. pressure.
One option under discussion is the EU’s Anti-Coercion Instrument, a powerful but never-before-used mechanism that would allow the bloc to retaliate against countries attempting to coerce EU member states through economic threats. Its activation would mark a significant escalation in Europe’s trade defense posture.
Industry leaders also warned that Trump’s latest threat could derail tentative trade understandings reached last year with both the European Union and Britain, another potential target of the proposed Greenland-linked tariffs.
The controversy has already cast doubt on whether EU lawmakers will proceed this month with a planned vote on a trade deal with Washington, which would involve reducing or eliminating a range of EU tariffs on U.S. imports.
“The European Parliament cannot realistically approve tariff cuts for the United States while Washington is simultaneously threatening the EU with new punitive measures,” Kawlath said.
Automakers Already Feeling the Pain
Trump’s existing tariff framework is already taking a heavy toll on German companies, particularly the automotive sector, the largest in Europe. Under the current deal, a baseline tariff of 15 percent applies to many goods, with even higher rates for steel and aluminum products.
Between January and November 2025, Germany exported just over 135 billion euros’ worth of goods to the United States, a drop of 9 percent compared with the same period a year earlier, despite the U.S. remaining Germany’s single largest export market.
Volkswagen has estimated that tariffs could cost the company as much as 5 billion euros in 2025 alone. Fellow automakers Mercedes-Benz and Porsche have also reported significant impacts, alongside industrial heavyweights such as chemicals giant BASF.
The potential for even higher tariffs is alarming labor leaders as well. In Lower Saxony, home to Volkswagen’s headquarters, union representatives warned that further trade escalation could choke off Germany’s already fragile recovery.
“This form of U.S. trade policy produces no winners,” said Thorsten Groeger of the IG Metall union. “Consumers, workers and companies all suffer on both sides of the Atlantic.”
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