The geopolitical landscape of the North Atlantic has been thrust into a state of heightened volatility following a series of provocative statements regarding the sovereignty of Greenland, prompting France to urge the European Union to mobilize its most formidable economic arsenal. In a move that signals a hardening of European resolve against perceived economic bullying, Paris is advocating for the deployment of the Anti-Coercion Instrument (ACI), a relatively new and powerful trade mechanism designed to shield the bloc’s member states from external pressure. This escalation marks a significant shift in Transatlantic relations, as the European Union prepares to defend the territorial integrity and political autonomy of its constituent parts through aggressive trade countermeasures.
At the heart of this burgeoning dispute is the renewed interest from the United States, under the potential policy shifts of a second Trump administration, in the acquisition of Greenland. While the proposal was dismissed as an absurdity by Danish and Greenlandic officials during the former president’s first term, the rhetoric has now evolved from a diplomatic curiosity into a potential economic ultimatum. Reports suggest that the threat of sweeping tariffs on European goods is being considered as a lever to force negotiations over the Arctic territory. In response, French officials have been vocal in their insistence that the European Union must not merely protest such tactics but must be prepared to retaliate with equivalent force to protect the single market and the sovereignty of the Kingdom of Denmark.
The Anti-Coercion Instrument, which officially entered into force in late 2023, represents the EU’s "nuclear option" in trade diplomacy. It was specifically engineered to allow the European Commission to impose a wide array of restrictions—including increased customs duties, limits on public procurement, and restrictions on services or foreign direct investment—against any third country that uses economic measures to coerce the EU or its member states into making specific policy choices. Unlike traditional trade disputes that often languish for years in the World Trade Organization’s (WTO) appellate body, the ACI is designed for speed and unilateral action, allowing the EU to bypass the gridlocked international arbitration systems that have been weakened by years of institutional neglect.
France’s push for the ACI reflects a broader strategic philosophy championed by President Emmanuel Macron: European Strategic Autonomy. For Paris, the threat to Greenland is not merely a territorial dispute but a fundamental challenge to the rules-based international order. By advocating for the use of the ACI, France is signaling that the era of European passivity in the face of aggressive American protectionism is over. The French government argues that the credibility of the European Union as a global power depends on its willingness to deploy its economic weight—representing a market of 450 million consumers and a combined GDP of over $18 trillion—to deter "geopolitical blackmail."
The economic stakes of this confrontation are immense. The United States and the European Union share the largest bilateral trade and investment relationship in the world, with trade in goods and services exceeding $1.3 trillion annually. However, this relationship has been strained by a decade of friction, from the Boeing-Airbus subsidy wars to the Section 232 tariffs on steel and aluminum. A new trade war triggered by a dispute over Greenland would likely target high-value sectors such as the German automotive industry, French luxury goods, and Italian agricultural exports. Conversely, EU retaliation under the ACI could see American tech giants, aerospace firms, and energy exporters facing significant barriers to the European market.
Beyond the immediate trade implications, the Greenland issue is deeply intertwined with the global race for critical minerals and Arctic security. Greenland is believed to hold some of the world’s largest deposits of rare earth elements, including neodymium and praseodymium, which are essential for the green energy transition and advanced military hardware. Currently, the global supply chain for these minerals is dominated by China, a vulnerability that Washington is desperate to address. Furthermore, the Pituffik Space Base (formerly Thule Air Base) in northern Greenland remains a cornerstone of the U.S. ballistic missile early warning system. For the United States, Greenland is a strategic asset of the highest order; for the EU, it is a partner whose resources and stability are vital to European security and climate goals.
The internal dynamics of the European Union, however, present a challenge to France’s hawkish stance. While Paris leads the charge for retaliation, other member states, particularly those with deep export dependencies on the U.S. market, remain wary of a full-scale trade war. Germany, the bloc’s industrial engine, has historically preferred a policy of de-escalation and dialogue, fearing that aggressive countermeasures could provoke a backlash that would devastate its struggling manufacturing sector. Smaller Nordic and Baltic states, which rely heavily on the U.S. security umbrella through NATO, are also cautious about any move that might alienate their primary guarantor of defense against Russian aggression.
Despite these internal divisions, the legal architecture of the ACI is structured to facilitate action. The instrument allows for a "qualified majority" vote among member states, meaning that a single country cannot easily veto a collective response. This structural shift was intentional, designed to prevent the paralysis that often characterizes EU foreign policy. If the European Commission determines that the threat of tariffs linked to Greenland constitutes "economic coercion," the path to retaliation becomes a matter of administrative process rather than purely political consensus.
The global context of this dispute further complicates matters. The rise of "geo-economics"—the use of economic instruments to achieve geopolitical goals—is a defining feature of the 21st century. China has frequently used trade bans and consumer boycotts to punish countries like Lithuania and Australia for political decisions. The United States has increasingly utilized the dollar’s dominance and export controls as tools of statecraft. In this environment, the European Union views itself as the last major power attempting to uphold a multilateral system that its peers are increasingly abandoning. The use of the ACI would, ironically, be a unilateral move intended to defend the principle of multilateralism and sovereign equality.
Economists warn that a prolonged trade conflict between the world’s two largest democratic blocs would have severe repercussions for the global economy, which is already grappling with high interest rates and slowing growth. A "tit-for-tat" tariff regime could add several percentage points to inflation on both sides of the Atlantic, disrupting supply chains that have only recently recovered from the shocks of the COVID-19 pandemic and the invasion of Ukraine. Moreover, it would likely drive a wedge into the Western alliance at a time when coordination on issues such as the war in Ukraine and the management of China’s rise is more critical than ever.
As the rhetoric from Paris intensifies, the ball remains in Washington’s court. The "Greenland gambit" may be a tactical maneuver designed to test European unity or a genuine shift in U.S. strategic priorities toward the Arctic. Regardless of the intent, the European response is being calibrated not just for the current threat, but as a deterrent for the future. By invoking the Anti-Coercion Instrument, France and its allies in Brussels are attempting to establish a new "red line" in international trade. They are asserting that while the "Art of the Deal" may be a philosophy of negotiation in the private sector, it cannot be applied to the sovereignty of nations and the integrity of the European project.
In the coming months, the European Commission is expected to conduct a series of impact assessments and legal reviews to determine the feasibility of ACI activation. This process will be watched closely by market analysts and diplomats worldwide. If the EU proceeds, it will mark the most significant use of trade defense in its history, potentially reshaping the Transatlantic alliance for a generation. The frozen landscape of Greenland, once a quiet frontier of the Cold War, has thus become the unlikely flashpoint for a modern struggle over the future of global trade and the limits of economic power. The resolution of this crisis will determine whether the world moves toward a more fragmented, coercive economic order or returns to a system defined by the rule of law and mutual respect for national boundaries.
