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The Guardian - UK
The Guardian - UK
Comment
Rosa Balfour

The EU finally used an economic threat against Trump. But the markets forced his climbdown

Donald Trump arriving at the White House after returning from the World Economic Forum in Davos, 22 January 2026.
Donald Trump arriving at the White House after returning from the World Economic Forum in Davos, 22 January 2026. Photograph: Alex Wroblewski/AFP/Getty Images

The past couple of weeks have seen the most spectacular crisis escalation in the transatlantic relationship, over the US threat to annex Greenland, a self-governing territory of Denmark. It risked becoming a major conflict among the members of Nato, the most powerful security alliance in world history – until now.

On Wednesday, after a meeting with Nato’s secretary general, Mark Rutte, the US president, Donald Trump, backtracked on his threats to slap tariffs on countries that got in the way of his annexation project. As European leaders huddled together over dinner for a post-crisis debrief in Brussels on 22 January, they congratulated themselves on their unity and appreciated the intervention of Rutte, or “Daddy diplomacy”. If these really were the conclusions of the latest debacle in transatlantic relations, they are missing important parts of the story.

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