EU Parliament halts US trade deal after Trump tariff threat

The European Parliament has formally suspended the ratification process of its trade deal with the United States in response to President Donald Trump’s threat to impose 10-percent tariffs on EU exports unless the bloc agrees he can take over Greenland.

The decision that came on Wednesday marks the strongest material response so far by the European Union to what several top officials described last week as blackmail.

Bernd Lange, head of the European Parliament’s trade committee, said that until “the threats [on Greenland] are over there will be no possibility for compromise” on ratifying the US deal, which promised Americans a new era of zero-percent tariffs on many industrial exports.

Lange confirmed that the EU’s pledge to buy $750 billion worth of energy from the United States would not be affected by the move, as it was separate from the tariff agreement.

EU commission chief avoids Trump

In a sign of worsening transatlantic relations, European Commission President Ursula von der Leyen returned to Brussels after addressing the European Parliament instead of detouring to Davos to meet Trump.

She went back to prepare for an emergency summit in Brussels on Thursday to discuss a range of options open to the EU should the US president carry out his tariff threat.

‘Nuclear deterrent’ of trade sanctions

Those options include imposing €93 billion worth of tariffs on US exports to the EU and activating a never-before-used anti-coercion instrument, described as the “nuclear deterrent” of trade sanctions. The mechanism would allow the bloc to restrict US businesses from accessing the EU market. In theory, the EU could target anything from US tech and crypto companies to aircraft makers or agricultural goods.

However, European consumers could balk at extra costs or restrictions on US companies such as Apple or Netflix.

The EU has said it continued to work on diplomatic solutions to avert a trade war, while Lange conceded that “a lot could happen” between now and February 2, when Trump’s tariff threats are due to be realized. “There are always day-by-day surprises coming from the White House,” he said.

Mercosur trade deal in jeopardy

As tensions with Washington mount, the European Parliament has also dealt a blow to the EU’s efforts to diversify its trade ties. MEPs voted, by a majority of just 10, to refer the Mercosur trade deal with Latin American countries to the European court of justice.

The decision was condemned by Lange, while the European Commission said it was “regrettable,” a view echoed by German Chancellor Friedrich Merz. Car manufacturers in Germany also denounced the move.

The European Commission retains the power to implement the Mercosur agreement provisionally, as it did with the Brexit trade deal with the UK. However, Lange warned that if the Commission pressed ahead with such a step, it would plunge the bloc into “huge institutional conflict.”

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