Ask Onix
Strasbourg, 21 January 2026 - The European Parliament is poised to halt the ratification of a US-EU trade agreement reached last July, escalating transatlantic trade frictions after Washington threatened new tariffs over Greenland, according to sources familiar with the decision.
Decision to be announced in Strasbourg
The suspension will be formally disclosed in Strasbourg on Wednesday, where the Parliament's international trade committee holds its session. The move follows weekend threats by US President Donald Trump to impose fresh levies in response to Denmark's refusal to sell Greenland to the United States.
Market reaction reflects growing unease
Financial markets reacted sharply to the deepening dispute. European equities recorded a second consecutive day of losses on Tuesday, while US indices tumbled- the Dow Jones Industrial Average fell 1.7%, the S&P 500 dropped 2%, and the Nasdaq declined 2.4%. Asia-Pacific markets showed mixed performance on Wednesday, with Japanese and Hong Kong benchmarks slightly lower, while mainland Chinese shares edged higher.
Safe-haven assets surged: gold prices climbed above $4,800 per ounce for the first time, while silver retreated from Monday's record high of $95 per ounce. The US dollar remained stable against major currencies after a 0.5% overnight decline, its steepest drop since early December.
Parliament leaders cite sovereignty concerns
Manfred Weber, a prominent German member of the European Parliament, declared on Saturday that "approval is not possible at this stage" in light of Trump's tariff threats. Bernd Lange, chair of the Parliament's international trade committee, echoed the sentiment, stating there was "no alternative" but to suspend the deal.
"By threatening the territorial integrity and sovereignty of an EU member state and by using tariffs as a coercive instrument, the US undermines the stability and predictability of EU-US trade relations."
Bernd Lange, Chair, European Parliament International Trade Committee
Lange's committee must endorse the agreement before it proceeds to a full parliamentary vote. The suspension halts further legislative steps until Washington shifts toward "cooperation rather than confrontation," he added.
Retaliation threats resurface
The EU had previously prepared retaliatory tariffs worth €93 billion ($109 billion) on US goods in response to Trump's April "Liberation Day" tariffs but paused the plan during negotiations. That reprieve expires on 6 February, with levies set to take effect the following day unless extended or replaced by the new deal's approval.
French President Emmanuel Macron urged the bloc to explore retaliatory measures, including the so-called "trade bazooka," an anti-coercion tool designed to counter economic pressure. Speaking at the World Economic Forum in Davos, Macron condemned Washington's "endless accumulation" of tariffs as "fundamentally unacceptable," particularly when used as leverage against territorial sovereignty.
US officials warn against retaliation
US Treasury Secretary Scott Bessent cautioned European leaders against retaliatory actions, advising them to "have an open mind" ahead of Trump's scheduled address in Davos. Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer issued similar warnings, with Greer stating, "When countries follow my advice, they tend to do okay. When they don't, crazy things happen," according to Agence France-Presse.
Washington has expressed frustration with the pace of European approval for the July deal, which reduced US tariffs on most European goods to 15% from an initial 30% threat. In exchange, the EU agreed to invest in the US and implement regulatory changes to boost American exports.
Broader trade stakes
The US and EU remain each other's largest trading partners, with €1.6 trillion ($1.9 trillion) in goods and services exchanged in 2024-nearly a third of global trade. Trump's tariff announcements last year triggered widespread threats of retaliation, though most countries, including the EU, opted for negotiation over confrontation. Only China and Canada followed through with counter-tariffs, though Canada later rolled back most measures in September, citing economic harm.
In Davos, Canadian Prime Minister Mark Carney called on "middle powers" to unite against great-power rivalry, warning that bilateral negotiations with a dominant hegemon risk "the performance of sovereignty while accepting subordination."
A pending US Supreme Court decision on the legality of Trump's 2025 tariffs looms over the dispute, adding further uncertainty to transatlantic trade relations.
