Trump tariff threat heightens economic uncertainty for Europe and markets

Donald Trump’s latest tariff threat, framed as part of his pursuit of seizing Greenland, is a political nightmare for European leaders and could create a severe economic headache, the analysis says. The International Monetary Fund has repeatedly warned since Trump’s trade war began that uncertainty itself damages economies, and IMF managing director Kristalina Georgieva said in October that in the Trump era “uncertainty is the new normal”.

Businesses typically delay investment when policy is unclear, the article notes, and the UK learned that cost during the years of Brexit wrangling after the 2016 referendum. Firms in the UK and EU had begun to plan with greater certainty after trade deals with the US were struck and signed with ceremony last summer.

If Trump proceeds with 10% tariffs in February rising to 25% on 1 June, the piece says, it would “throw sand in the wheels of the economy” at a fraught moment: France is deep in a budgetary crisis and Germany had been hoping for an upturn after stagnating in 2025. For UK chancellor Rachel Reeves, the timing could not be worse, coming just as she had cause to hope for a modest upturn after a difficult 12 months.

There is also a risk of higher prices at home. Tariffs already imposed over the last year are the highest since the second world war, though lower than Trump initially threatened, and so far inflation has barely budged.

Key Topics

Business, Donald Trump, Greenland, International Monetary Fund, Kristalina Georgieva, Rachel Reeves