Bullying works for Donald Trump: it’s taken him to the top. But his bullying to get hold of Greenland may misfire. To try to blackmail Europe into selling him the giant frozen island, Trump is resorting to his favourite weapon – import tariffs. But they will hurt the US economy too. And a particular vulnerability for Trump is the pumped up balloon of US financial markets.
Trump claims that taking possession of Greenland is vital to America’s security. But the US has a base on the island now and, working with its NATO allies, can certainly defend Greenland successfully against distant China and Trump’s “good friend” in Russia, the murderous dictator and war criminal, Vladimir Putin. Trump’s efforts to acquire the island have less to do with US security than with his insatiable ego.
Greenland’s area of 836,000 square miles is considerably bigger than Alaska and about three times the size of Texas. Its vast land mass is known to contain uranium and many minerals, not least rare earths, though the extent of the reserves is unproven. The economic attractions may be great, but they are not easy to tap. The vast island has about one hundred miles of road – and these are within its towns. Seeking out minerals would be difficult and would take years. But Greenland may have another, more straightforward, instant gratification to offer Trump.
Acquiring Greenland would expand the area of the United States by about 22%. Trump would be among the few presidents able to increase significantly the area of the United States. That’s definitely something for Trump to boast about.
And Trump may have something further in mind. If he can expand the territory of the United States by a fifth and stamp his authority across the world, from nearby Venezuela to distant Iran, why would Americans want him to stand down as president?
Trump has mooted the idea of a third term on several occasions. In April 2025 his official merchandise store began selling Trump 2028 baseball caps. The US constitution would have to be amended – or got round in some way. That would be difficult but Trump will think that he can bully his way to what he wants. Why not?
And yet Trump’s bid for Greenland may also reveal the limits to his power.
Trump is threatening to increase import tariffs on Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the UK, by 10% on February 1st but could raise the tariff to 25% in June if no agreement is reached. There is no question that this would hurt European exports to the US and weaken growth in Europe. But it would also weaken US growth and increase US inflation, impeding further cuts in interest rates by the US Federal Reserve – which Trump has also been bullying, unsuccessfully so far, eager to see rates cut, notwithstanding the inflationary risks.
A further threat to the US is that the EU could fire back. The EU discussed again on January 18th an earlier plan to respond to Trump’s April 2, 2025 “Liberation Day” tariff assault. The plan, to levy tariffs on €93bn of US goods, was suspended after Trump backtracked. If the EU acts now Trump would finally have provoked a trade war. That would be a completely negative step, harming growth in the West, and globally. And markets would not like it.
Trump has already had a warning. His Liberation Day assault on the world last April hit US stockmarkets hard. The S&P 500 had plunged by 12% before Trump, a week after opening fire, retreated and postponed the introduction of tariff increases.
Now Trump is again taking the same risk. US stockmarkets recovered fast once Trump turned tail last April and are again pushing at record highs. The worries about lofty valuations and the concentration of the market in a few big leading companies are persistent. There are question marks too about whether US Treasury bond yields – the interest rate on the funds the government borrows – could soar given the disregard Trump is showing for a fiscal deficit in the region of 5-6% of GDP and government debt that, consequently, is surging, up from about 100% of GDP before the Covid pandemic to over 120% of GDP now.
Trump acts as though he can act recklessly in the US and around the world and there will never be a price to pay. The markets are liable to tell him now that there is.
Trump might find that Greenland is too big even for him to swallow.
