The European Parliament has put on hold the approval of an important trade agreement with the United States that was finalised in July, following objections to former US President Donald Trump’s renewed push to take control of Greenland.
The decision was announced in Strasbourg on Wednesday, coinciding with Trump’s address at the World Economic Forum in Davos. Lawmakers said the pause was triggered by rising trade tensions after Trump’s Greenland comments unsettled markets and revived fears of a fresh trade conflict between the US and Europe.
Later the same day, Trump claimed on social media that he had reached a “framework agreement” regarding Greenland’s future and said he would step back from threats to impose new tariffs on eight NATO countries.
Relations between the US and the EU had stabilised after a deal was reached at Trump’s Turnberry golf resort in Scotland last July. Under that agreement, US tariffs on most European goods were reduced to 15% from the previously threatened 30%, while Europe committed to increased investment in the US and policy changes aimed at boosting American exports. However, the deal still required formal approval from the European Parliament.
Following Trump’s latest tariff warnings, Bernd Lange, head of the European Parliament’s International Trade Committee, said lawmakers had “no choice” but to suspend work on the necessary legislation. He stated that progress would remain frozen until the US returned to a cooperative approach.
The suspension reopens the possibility that the EU could move ahead with retaliatory tariffs worth up to €93 billion on US goods, measures that were announced last year but paused during negotiations. These tariffs could now take effect from 7 February unless the EU extends the delay or approves the trade agreement.
Lange also warned that the EU could consider using its anti-coercion mechanism—often described as a “trade bazooka”—a position supported by French President Emmanuel Macron.
After Trump later softened his stance, Lange said it was too early to judge whether the trade deal could be rescued, noting that the EU would need time to assess the implications of the proposed Greenland framework.
Trump’s remarks in Davos, where he reiterated interest in Greenland but ruled out the use of force, helped calm financial markets. US stock indices rose, European shares stabilised, and investors continued to turn to gold and silver as safe-haven assets amid ongoing uncertainty.
The US and the EU remain each other’s largest trading partners, with trade worth over €1.6 trillion in goods and services in 2024, accounting for nearly one-third of global trade. While Trump’s tariff threats last year prompted retaliation warnings from many countries, most chose negotiation over confrontation, with China and Canada being notable exceptions.
Meanwhile, a US Supreme Court ruling on the legality of several tariffs imposed last year remains a key unresolved issue in the background of the dispute.
