President Donald Trump’s second term in office has largely been characterised by his propensity to impose tariffs on his foes.
From Mexico and Brazil to Canada, China and the European Union, it’s almost easier to ask who hasn’t been hit by Trump’s tariffs than who has. Admittedly, a great deal of these tariffs ended up being threats and were never actually implemented completely, with “at-risk” nations choosing to give in to the president’s demands rather than be punished in a trade war. However, many nations chose to stand firm and take the tariffs on the chin, with varying repercussions across the board.
With this overwhelming recent history, it’s not unsurprising that “Donald Trump announces tariff” stories simply don’t get the same attention that they used to – he is the president who cried “tariff”, after all.
But, this one’s different. Sure, Trump has always used tariffs as a means to an end – it’s become a political tool that he’s used to successfully get his way a countless number of times; so much so that if it wasn’t so threatening to non-Americans, it would actually be impressive.
This time, however, he’s not just trying to secure favourable trade deals. This time, the threat is far greater.
Trump’s EU Tariff Threat: Reading Between the Lines
According to a post written and published by Trump himself on Truth Social, “This tariff will be due and payable until such time as a Deal is reached for the Complete and Total purchase of Greenland.”
Put simply? European nations and the European Union must support the United States’ “purchase” of Greenland, or it will impose ongoing tariffs that will cause potential permanent damage – disrupting global supply chains, destablising markets, driving up prices for consumers, putting pressure on global trade alliances and so much more.
The stakes have never been higher, and many experts are asserting that if the EU doesn’t put its proverbial foot down now and stop Trump from imposing his will on the rest of the world, there will be dire consequences. Not only with regard to the direct results of the ongoing tariffs on major European nations, but many speculate that allowing the US to conquer Greenland will set a precedent so dangerous that it could launch the world into a 21st-century version of a Cold War – except, it may not be so cold…
How Will These Tariffs Affect the Future Of Global Trade And Tariff-Driven Diplomacy?
If Trump follows through on the threat of sustained, punitive tariffs tied not to trade concessions and economic conditions but to geopolitical loyalty, it would mark a fundamental shift in how economic power is used on the global stage. This is no longer about protecting domestic industries or correcting trade imbalances. Now, it’s about using access to the world’s largest economy as leverage to force political outcomes.
And that should make every government nervous, at the very least.
For decades, global trade, while admittedly imperfect and often unequal, has at least been governed by a shared framework of rules, institutions and norms. The World Trade Organisation, bilateral agreements and multilateral blocs were designed to prevent exactly this: powerful nations strong-arming weaker ones through economic coercion. Tariffs were always meant to be economic tools, not political and ideological weapons.
Trump’s approach blurs that line beyond recognition, and opens the door to a very different paradigm in the world of trade, power and geopolitics.
If the United States successfully uses tariffs to extract political compliance over Greenland, it sends a very clear message to the world: economic dependence can and will be exploited. The danger here isn’t just what happens between the US and Greenland, but what other global powers learn from the precedent.
That is, if the US can threaten 100% tariffs to achieve territorial ambitions, why wouldn’t China apply similar pressure on Taiwan? Why wouldn’t Russia escalate its economic coercion of neighbouring states and tighten its grip on the Ukraine? Why wouldn’t regional powers across Africa, Asia and South America adopt the same playbook?
Tariff-driven diplomacy, once normalised, couldn’t possibly be contained. Not only that, but it would completely change the world as we know it.
There are also practical implications for global trade itself. Businesses thrive on predictability, and supply chains are built on long-term assumptions about stability, regulation and access. Now, if access to major markets becomes conditional on political alignment rather than economic compliance, companies will be forced to rethink everything – where they invest, where they manufacture and which markets they prioritise (and all of this will be influenced by political affiliation). The likely result here, according to many experts, is fragmentation – more regional trade blocs, less global cooperation and higher costs passed directly onto consumers.
For all intents and purposes, we’re referring to George Orwell’s “spheres of influence” – a slower, more divided global economy.
Perhaps most concerning for many is the erosion of trust. International cooperation relies on the belief that agreements, however tense they may be, are negotiated in good faith. When tariffs become a blunt instrument for territorial ambition, that trust evaporates. Allies begin to become unsure, neutral nations start picking sides and trade becomes less about mutual benefit and more about mere survival.
And once that shift happens, it’s incredibly difficult to reverse.
If Trump’s Greenland strategy succeeds, it won’t just reshape US-EU relations. It could potentially redefine how power is exercised in the global economy for years to come.
Our Experts:
- Dmitry Panenkov: Founder and CEO of emma
- Dr. Chinwe Lucia Egbe: Visiting Lecturer at The University of Law Business School
- Laurent Descout: CEO and Co-Founder of Neo
- Mark Tan: International Corporate Tax partner at Spencer West LLP
- Geoffrey de Mowbray: CEO and Founder of Dints International
- Michael Joseph: Compliance Expert at Napier AI
- Rich Pleeth: Co-Founder at Finmile
Dmitry Panenkov, Founder and CEO of emma
“The most consequential impact of the latest US tariffs is psychological. Sovereignty can no longer be dismissed as a “nice to have”; it requires a fundamental shift in mindset to be recognised as a credible and practical option. We are already seeing a clear uptick in interest in sovereign solutions, and the uncertainty created by tariffs is likely to amplify this trend, particularly in regulated sectors where risk tolerance is low.”
“While the tariffs are damaging in the near term, a possible longer-term effect is that European startups are forced to factor geopolitical and trade volatility into their technology decisions much earlier in their lifecycle. Enterprises may not switch cloud providers overnight, but they can quickly pause net-new spending and route new projects toward European or sovereign platforms.”
“Over time, this could tilt purchasing behaviour in favour of European-built solutions, with startups valuing predictability and resilience over the scale advantages traditionally offered by US hyperscalers.”
Dr. Chinwe Lucia Egbe, Visiting Lecturer at The University of Law Business School
“If implemented, a 25% tariff increase by the United States in June would have notable implications for the UK economy through both direct and indirect transmission channels. While the UK’s exposure to US tariffs may be less pronounced than that of some major trading partners, the interconnected nature of global supply chains means that higher trade barriers would increase input costs, reduce trade efficiency, and dampen international demand. UK firms that export to, or rely on intermediate goods from, the US may experience reduced competitiveness and margin compression, potentially leading to lower investment and employment growth.
“At the macroeconomic level, higher tariffs are likely to contribute to inflationary pressures by raising the cost of imported goods and disrupting established trade relationships. This would complicate monetary policy at a time when inflation control remains a priority. Slower global trade growth could also weaken UK export performance and constrain overall economic growth.
“For households, the effects would manifest through higher consumer prices, particularly for goods with significant import content such as food, energy-related products, and manufactured consumer items. As price increases outpace wage growth, real disposable incomes would be eroded, disproportionately affecting lower- and middle-income households.
“In this context, a US tariff escalation would exacerbate cost-of-living pressures and increase economic uncertainty, with adverse implications for consumer confidence and financial wellbeing across the UK.”
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Laurent Descout, CEO and Co-Founder of Neo
“I am afraid tariffs will drive more and more EU companies to move to the US. Europe is nowhere near being able to substitute US capital markets, investor base, cloud services and AI. Even energy for data centres is under threat, as the EU imports most of its gas from the US. Cutting links with the US is likely to leave European start-ups with the only thing the EU has been doing so far, which is overregulating.
“Capital markets in the EU are limited and fragmented. Putting a tariff border between the EU and US will simply push companies to get listed in the US, as Europe is far from being able to deploy a capital base that rivals the US.”
Mark Tan, International Corporate Tax partner at Spencer West LLP
“The threatened tariffs illustrate how trade measures are increasingly being used as strategic instruments rather than predictable economic policy. They are announced, dialled up, or paused not because they improve economic outcomes, but because they create leverage over where companies operate.
“From an international tax and trade perspective, this is a timely reminder that geography still matters. Supply chains are the bloodline of profitability: where value is created and, ultimately, where profits are taxed. Even the threat of tariffs introduces fresh scrutiny over where goods are sourced, where value is added, and where profit sits. Tax location and trade origin are not the same thing, and the distinction is often misunderstood. I see this confusion regularly. A business can be impeccably structured from a tax residence perspective yet still be exposed to tariffs because of where goods are manufactured or substantially transformed.
“Historically, trade policy (including tariffs) was at least nominally about economic efficiency. Tariffs were used to protect specific domestic industries or to raise revenue, and they sat within trade frameworks that businesses could plan around. Automotive tariffs, agricultural duties, and textile quotas were rarely surprises. Companies knew the rates, understood the rules of origin, priced them into contracts, and structured supply chains accordingly. The system might not have been frictionless, but it was stable.
“What we are seeing now is different. Tariffs are increasingly deployed as a bargaining chip. They are announced, threatened, paused, or targeted not because they improve economic outcomes, but because they create pressure: pressure on counterparties, pressure on allies, and pressure on companies to relocate activity, change sourcing, or support wider strategic objectives that have little to do with cost or efficiency.
“For internationally exposed UK businesses, my consistent response has been preparation through a disciplined Tax Operating Model that integrates tax, trade, and supply-chain strategy. Understanding where real trade exposure sits, separating tax risk from customs risk, and stress-testing operating structures against trade friction are no longer optional, but core elements of international structuring and decision-making.”
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Geoffrey de Mowbray, CEO and Founder of Dints International
“For many BExA members, the US isn’t just another market – it’s taken years of hard work, travel, and investment to build these relationships. The idea that new tariffs could be imposed with little warning leaves businesses unsure how to plan or price for the months ahead.
“A significant number of our members are owner-managed companies with tight margins. They don’t have teams of lawyers or the ability to simply swallow extra costs, so tariffs can very quickly tip a viable export relationship into something that no longer works.
“What makes it particularly difficult is the uncertainty. Businesses can plan for challenges, but it’s much harder to plan when trade becomes entangled in wider political disputes. Exporters will be hoping for clear heads and practical solutions, because they’re the ones caught in the middle.”
Michael Joseph, Compliance Expert at Napier AI
“Using tariffs to pressure other nations over territorial ambitions is unconventional. tariffs are typically designed to address economic imbalances or enforce agreed sanctions, not to compel political outcomes. When trade measures are deployed in this way, they blur the line between diplomacy and economic coercion, creating instability across global commerce.
“For businesses and compliance professionals, this uncertainty significantly increases financial crime risk. Sudden, politically driven tariff changes force rapid supply-chain restructuring, introducing new intermediaries, jurisdictions, and trade routes with reduced oversight.
“These transitional periods are particularly vulnerable to mis-declared goods, falsified documentation, and trade-based money laundering. If left unchallenged, this approach risks normalising tariffs as tools of political leverage rather than negotiated policy. That precedent would weaken predictability, erode trust between trading partners, and demand a more dynamic, intelligence-led compliance response as geopolitical risk becomes inseparable from financial crime prevention.”
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Rich Pleeth, Co-Founder at Finmile
“This geopolitical strategy relies purely on pressure as the main tactic, weaponzing tariffs to force other countries to accept a territorial demand crosses a line from negotiation into coercion. Economic threats are being used to punish non-compliance.
“So what does this mean for global trade? If tariffs are used as blunt political weapons, trust in the global trading system erodes, businesses struggle to adjust quickly and plan around rules that change based on political leverage, supply chains fragment and countries start prioritising resilience over efficiency. This may become normalised and sets a worrying precedent, access to markets can be weaponised to achieve unrelated political goals. This will mean retaliation and a shift toward more bloc based trade. In the long term, this approach weakens global trade and increases instability rather than strengthening national leverage.”
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