Trump Halted EU Tariffs: Trans-Atlantic Trade Deal Back on Table Amid Greenland Framework

Risk appetite toward European assets received a boost on Thursday after President Donald Trump abruptly withdrew threats to impose a 10-25% tariff on eight European nations. The decision follows a strategic “framework” agreement reached with NATO regarding defense and resource access in Greenland and the wider Arctic region.

In response to the de-escalation, European Parliament President Roberta Metsola confirmed that the legislature is preparing to restart the ratification process for the stalled EU-US trade agreement, potentially holding a vote within days. This marks a sharp reversal from earlier in the week when the Parliament froze negotiations due to what they termed “coercive” threats from the White House.

The “Greenland Framework” Ambiguity

While the immediate trade war risk has subsided, the specifics of the geopolitical compromise remain opaque and potentially volatile.

• US Position: President Trump claimed the deal provides the US with “full access” to Greenland for military (Gold Dome missile defense) and mineral purposes, stating the US “got everything it wanted” without paying a fee.
• European/Danish Position: Greenland's Premier Mualoko Nielsen and Danish officials have drawn a hard line, stating that while defense cooperation is welcome, sovereignty is not negotiable. Nielsen explicitly rejected land cession, emphasizing that any agreement requires the direct participation of Nuuk and Copenhagen.

Market Implications: EUR/USD and Capital Flows

The removal of the immediate tariff threat removes a significant tail risk for the Euro (EUR) in the short term. However, the underlying tension suggests long-term structural changes in capital flows.

Reports indicate that European institutional wealth is increasingly diversifying away from US assets. The “weaponization” of US economic policy and unpredictability regarding property rights (highlighted by the Greenland annexation rhetoric) has prompted some European family offices and pension funds to reduce USD exposure.

Strategists warn that while the trade truce is positive, the narrative of “policy unpredictability” in Washington may keep the dollar's upside capped against the Euro as investors price in higher geopolitical risk premiums for US-domiciled assets.