No more violence, no more tax increases! Trump stages

**Source**: Wall Street Insights

**By Zhao Ying**

As recently as last weekend, Trump was threatening to impose a 10% tariff on the European Union starting next month, but on Wednesday he backed down, stating that "there is no need to use force" and posting a message that the tariff hike would be delayed. In exchange for Trump withdrawing the tariff threat, the U.S. may obtain the right of first refusal for investments in Greenland's mineral resources. The White House stated that if this agreement is reached, the U.S. will permanently achieve all its strategic goals in Greenland at an extremely low cost.

U.S. President Donald Trump staged a dramatic U-turn at the World Economic Forum in Davos, shifting from threats of military action and tariff hikes to seeking a negotiated solution to the Greenland issue within just a few hours. This abrupt reversal stemmed from days of behind-the-scenes mediation by European leaders, ultimately leading to the emergence of a preliminary framework agreement covering Arctic security, mineral resources, and military bases.

When Trump arrived in the Swiss Alps on Wednesday afternoon, European leaders were still panicking over the possibility that his ambitions for Greenland could trigger a transatlantic conflict. But by sunset, Trump had made it clear that he would not use force to seize Greenland and had scrapped the previously promised tariffs on European countries. Following a meeting with NATO Secretary-General Mark Rutte, he announced that a "framework for a future agreement" had been reached regarding the world's largest island.

This shift came as a huge relief to European leaders grappling with economic turmoil and threats to NATO's stability. Just days earlier, Trump had refused to rule out the use of military means to acquire Greenland. According to Xinhua News Agency, Trump posted a photo on social media in the early hours of the 20th: he was meeting with European leaders in the White House Oval Office, and in the map displayed on the board behind them, Canada, Greenland, and Venezuela—along with the U.S. mainland—were all covered with American flags. As recently as last weekend, he threatened that if an agreement to purchase Greenland could not be reached, he would impose a 10% tariff on eight countries starting next month, which would rise to 25% in June.

According to a Wednesday report by *The Wall Street Journal*, this reversal was the result of days of behind-the-scenes talks between Trump, his advisors, and European leaders. European nations maintained a united front in opposing Trump's bid for Greenland, employing incentives including enhanced commitments to Arctic security, as well as warnings about the dangers to the U.S. of a deep rupture within NATO.

## Framework Agreement Takes Shape

According to European officials familiar with the discussions, the negotiations are expected to center on several core areas. These include a potential agreement between the U.S. and Denmark on the stationing of troops at bases in Greenland, as well as expanded European security efforts in the Arctic region. The U.S. may secure the right of first refusal for investments in Greenland's mineral resources—a veto power designed to prevent Russia from exploiting the island's wealth—in exchange for Trump withdrawing his tariff threats.

In an interview with reporters, Trump described the framework as "really great" but provided few details. He stated that Denmark, which exercises control over Greenland, had been informed of the potential agreement. White House Press Secretary Karoline Leavitt said in a statement: "If this agreement is reached—and President Trump very much hopes it will be—the United States will permanently achieve all of its strategic objectives in Greenland at an extremely low cost."

The White House declined to comment on the specifics of the proposed framework, with a Trump administration official noting that the scope of the negotiations has not yet been finalized. A NATO spokesperson said that Trump and Rutte had "discussed the critical importance of Arctic security to the United States and other NATO allies" on Wednesday. Negotiations on the proposed framework will focus on how NATO member states can cooperate to ensure Arctic security, while more specific talks between Denmark, Greenland, and the U.S. will aim to ensure that "Russia never gains an economic or military foothold in Greenland."

## 24 Hours from Toughness to Compromise

According to *The Wall Street Journal*, during his hour-long speech at the World Economic Forum on Wednesday, Trump sent early signals of his willingness to strike a deal. He stated that he would not deploy troops to seize control of Greenland—a stark contrast to his stance just days earlier, when he refused to rule out military force. "I don't have to use force," he said. "I don't want to use force. I will not use force."

But Trump also launched sharp criticisms of long-standing allies in his speech. He described Europe as unrecognizable compared to earlier eras and claimed it was heading in the wrong direction. He accused Denmark of being ungrateful, stated that Switzerland would not exist as a country without U.S. support, and mocked French President Emmanuel Macron for wearing aviator sunglasses at the event. He implied that NATO allies were obligated to support the U.S. in its bid for Greenland, given America's central role in sustaining the transatlantic alliance. "We give so much, and we get so little in return," he said.

"We want a piece of ice to protect the world, and they won't give it to us," Trump said of his desire to acquire Greenland from Denmark. "You can say yes, and we'll be very grateful. Or you can say no, and we'll remember."

Trump received a lukewarm response as he spoke to a packed main hall of global elites, drawing scattered applause but also plenty of blank stares and nervous laughter. On Wednesday evening, Trump posted on Truth Social that he would delay the tariff hikes to allow for negotiations on the Greenland issue.

## Sharp Divisions in Interpretations

U.S. and European officials have drawn conflicting lessons from the Greenland episode. U.S. officials argue that Trump's tough stance forced European officials to the negotiating table, after they had refused for months to accommodate his efforts to gain control of Greenland. European officials, by contrast, maintain that a united front of opposition helped persuade Trump to reach an agreement that does not involve acquiring the territory.

Some of Trump's advisors have privately expressed concern that his harsh rhetoric has made it more difficult to strike a deal with Denmark. In recent days, administration officials have been discussing compromise proposals that would grant the U.S. access to mineral resources and land for military bases. Several of the president's external allies voiced their worries after stock markets tumbled on Tuesday due to Trump's Greenland-related tariff threats.

Danish Foreign Minister Lars Løkke Rasmussen said: "The day ended better than it began." Leaders of the 27 EU member states are scheduled to hold an emergency summit in Brussels on Thursday evening. While they no longer need to address an immediate trade war, they must now assess the damaged state of transatlantic relations.

## Spillover of Tensions in Davos

In Davos, tensions have occasionally surfaced behind the scenes. According to attendees, European Central Bank President Christine Lagarde walked out during a speech by U.S. Commerce Secretary Wilbur Ross at a dinner on Tuesday, a move some participants viewed as a sign of growing strain in transatlantic relations. Ross criticized Europe's energy policies and bemoaned what he described as the continent's declining competitiveness on the world stage at the invitation-only dinner.

Some dinner guests applauded Ross's remarks highlighting U.S. strength relative to Europe's, while others booed. An ECB spokesperson said in an email on Wednesday morning that they had "no comment." A Commerce Department spokesperson claimed that "no one stormed out during Secretary Ross's three-minute speech. Only one person booed, and that was Al Gore." The former U.S. vice president responded that he had listened to Ross's speech and had "not interrupted him in any way."

Canadian Prime Minister Mark Carney, in a speech in Davos earlier this week, said: "We are reminded every day that we live in an era of great power competition. The rules-based order is fading. The strong do what they will, and the weak suffer what they must."

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