Market Update: Trump tariffs over Greenland ‘will hurt’ UK economy – Daily Business – Full Analysis

President Donald Trump was roundly condemned by European leaders after announcing he will impose a new set of tariffs on countries exporting to the US unless he is able to acquire Greenland.

Mr Trump said the tariffs will kick in from 1 February and remain in place until “such time as a deal is reached for the complete and total purchase of Greenland” by the US.

Writing on Truth Social, Mr Trump said countries including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will be “charged a 10% tariff” on “all and any” goods sent to the US. On 1 June, this will be increased to 25%

Greenland is an autonomous territory of Denmark with self-government and its own parliament. It governs its own domestic affairs – but not its defence policy.

Analysts said the move would be a setback to the UK economy amid signs that it was starting to recover.

Whisky distillers, food producers and car manufacturers will be particularly anxious about the new levies. It would take taxes for UK steel exporters to 35%.

The new tariff regime will kill off any hopes that Scotland’s First Minister John Swinney had of securing lower tariffs for Scotch whisky exports after his headline-grabbing visit to the White House last summer.

Estimates suggest that the overall hit to the European Union would be about 0.5% of GDP over the medium term.

Germany, which is unusually dependent on goods exports to the United States, would suffer a fall of between 0.5 and 1% of GDP over two years, according to a study by Commerzbank. France would see growth slow by about 0.3 or 0.4%

Ursula von der Leyen, the president of the European Commission, said: “Territorial integrity and sovereignty are fundamental principles of international law. Tariffs would undermine transatlantic relations and risk a dangerous downward spiral.”

Manfred Weber, a Bavarian Conservative MEP and head of the Scottish parliament’s largest political bloc, said the European Union should put zero tariffs on US goods “on hold”.

It was only in May last year that a UK-US trade deal made the UK the first country to escape the worst of his “liberation day” tariffs.

However, this latest move stretches beyond economies and trade deals into defence and and sovereignty.

Mr Trump stood by his plan, saying: “We need Greenland for national security. I’m the tariff king and the tariff king has done a great job.”

Sir Keir Starmer described Mr Trump’s move as “completely wrong”, adding: “Our position on Greenland is very clear – it is part of the Kingdom of Denmark and its future is a matter for the Greenlanders and the Danes.

“We have also made clear that Arctic Security matters for the whole of Nato and allies should all do more together to address the threat from Russia across different parts of the Arctic.

“Applying tariffs on allies for pursuing the collective security of Nato allies is completely wrong. We will of course be pursuing this directly with the US administration.”

Mr Swinney, posting on social media, echoed Sir Keir’s sentiment that the “proposed use of tariffs by President Trump to change Greenland’s future is the wrong thing to do.

“Greenland’s future should be decided by the people of Greenland. Tariffs should not be a bargaining chip in place of reasonable dialogue between partners,” he said.

Tory leader Kemi Badenoch, said: “President Trump is completely wrong to announce tariffs on the UK over Greenland.

Reform leader Nigel Farage, a Trump sympathiser, said the tariffs over Greenland would hurt the UK.

He said: “We don’t always agree with the US government and in this case we certainly don’t. These tariffs will hurt us.

“If Greenland is vulnerable to malign influences, then have another look at Diego Garcia.”

There was widespread condemnation of the move across Europe. The leader of the Danish Democrats, Inger Stoejberg, said Denmark must not bow to “Trump’s bully methods”.

European Council President Antonio Costa said he is “co-ordinating a joint response”.

Susannah Streeter, chief investment strategist at Wealth Club, said: This is a migraine inducing development for politicians who have already had to go through tortuous negotiations to reach the first tranche of tariff deals, winning exemptions for certain sectors.

“For companies selling into the United States, and their customers this move creates another layer of difficult decision making.

“Already they’ve had to try and absorb the current tariffs, there will be little room to soak up any more, so this new tranche of duties is likely to end up being passed onto American customers. Many will baulk at paying higher prices, leading to lower sales, hurting exporters.

“The economy did appear to be taking tentative steps forward in terms of growth, but looks set to falter once again if fresh tariffs stick.”

William Bain, head of trade policy at the British Chambers of Commerce said:  “New tariffs on goods exported to the US will be more bad news for UK exporters, already struggling with the tariffs levied last year.  

“We know trade is one way to boost the economy and the success of transatlantic trade depends on reducing, not raising, tariffs. 

“The Government must prioritise the implementation of the Economic Prosperity Deal and negotiate calmly to remove the threat of these new tariffs.”