US administration withdraws announcement of 10% additional tariffs on several EU countries and the UK over Greenland

Overview

In its efforts to acquire Greenland, the US administration announced on January 17, 2026, that Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom would be subject to an additional 10% tariff after these countries sent a small number of military personnel to Greenland. On January 21, the US administration defused the conflict and surprisingly withdrew the announcement of the additional tariffs. The additional tariff would have been levied from February 1, 2026, and increased to 25% on June 1, 2026. The US administration cited an agreement with NATO on Greenland and the entire Arctic region as the reason for the withdrawal. Despite the withdrawal of the announcement of additional tariffs, the EU Parliament put work on the implementation of the trade agreement agreed between the EU Commission and the US administration on July 27, 2025, on hold from January 21. At a special summit of EU heads of state and government on January 22, 2026, on the subject of additional tariffs and the debate on Greenland with the US, agreement was reached to continue to work for good relations with the United States and to resume work on implementing the trade agreement. According to EU Council President António Costa, the introduction of additional tariffs would have been incompatible with the trade agreement between the EU and the US. Due to the calming of the situation, the EU has also suspended its own special tariffs on goods originating in the US, which were prepared in 2025 and amount to 10, 25, and 30%, for a further six months. These special tariffs would otherwise have come into force on February 7, 2026, and would have applied to motorcycles, jeans, poultry, beef, almonds, corn, furniture, and some household appliances, among other things. In addition, EU Commission President Ursula von der Leyen announced a comprehensive investment package for Greenland to invest more in Arctic security in the future.

Details of the trade agreement between the EU Commission and the US administration

On July 27, 2025, the EU Commission and the US administration agreed on a flat maximum tariff rate of 15%, which has applied to most products originating in the EU when imported into the US since August 7, 2025. In the case of reciprocal additional tariffs imposed by the US on other countries, the country-specific additional tariff applies in addition to the WTO-compliant most-favored-nation tariff rate. However, the following was agreed in the trade agreement between the EU and the US: For all goods for which the WTO-compliant most-favored-nation tariff rate is less than 15%, an additional tariff of 15% minus the WTO-compliant most-favored-nation tariff rate will be levied in the US, resulting in a flat maximum tariff rate of 15%. No reciprocal additional duty will be levied on imports into the US of goods for which the WTO-compliant most-favored-nation tariff rate is greater than 15%, meaning that only the WTO-compliant most-favored-nation tariff rate applies in these cases.

The flat maximum tariff rate of 15% also applies to vehicles and vehicle parts originating in the EU. The flat maximum tariff rate of 15% is also to apply to additional customs duties imposed on pharmaceuticals in the future. Until any additional tariffs on pharmaceuticals are introduced, these will continue to be subject only to WTO-compliant US most-favored-nation tariff rates when imported into the US. The trade agreement also stipulates that strategically important goods such as aircraft and aircraft parts, certain chemicals, certain generic drugs, and natural resources from the EU will be exempt from the flat maximum tariff rate of 15% tariff when imported into the US. In return, the EU will reduce import tariffs on goods originating in the US. Among other things, the EU will abolish import duties on industrial goods originating in the US. There are also plans to open up or improve US access to the EU market for certain fishery and agricultural products.

Provisional quota system for steel and aluminum and enhanced cooperation in the energy sector

A quota system for steel and aluminum is to be introduced. The EU and the US will jointly set tariff quotas for aluminum and steel products, which will reduce the additional tariffs of 50% currently in force in the US. Cooperation between the EU Commission and the US administration in the energy sector is also to be enhanced. The EU Commission has promised the US that it will purchase US$750 billion worth of energy from the US by 2028. The EU also wants to replace Russian gas and oil with significant purchases of LNG, oil, and nuclear fuels from the US. In addition, as part of the trade agreement, the EU has agreed to invest an additional US$600 billion in the US.

Key Take Aways

The US administration's announcement of additional tariffs for several EU countries due to the debate over Greenland, even though a trade agreement between the EU and the US had already been reached in 2025, has placed a heavy strain on transatlantic relations. Ultimately, however, the US administration withdrew its announcement and, after consultations, the EU unanimously decided to resume implementation of the trade agreement with the US. Since the trade agreement can be understood as a framework agreement and many details still need to be worked out, it is in the EU Commission's interest to stabilize the partnership with the US again.