Over the weekend, tensions between the United States and Europe escalated sharply after President Trump moved from rhetoric to action, announcing new tariffs on eight European countries opposing Washington’s push to acquire Greenland. Under the plan, a 10% tariff on all goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will take effect February 1, rising to 25% on June 1, and remain in place until a deal is reached for the purchase of Greenland. All eight countries are NATO members.
‍

European officials responded by warning that the European Union could suspend or halt implementation of the EU–U.S. trade deal agreed in mid-2025, characterizing the tariffs as political coercion rather than trade enforcement. Members of the European Parliament and several national governments said the measures undermine the foundations of the transatlantic relationship and risk triggering a retaliatory spiral.
‍

The EU–U.S. agreement intended to provide predictability for companies operating across the Atlantic. It capped U.S. tariffs on most EU exports at 15%, eliminated tariff stacking, and established zero or near-zero tariff regimes for specific categories such as aircraft and parts, generic pharmaceuticals, chemical precursors, and select natural resources. The framework also included cooperation on metals, supply-chain security, regulatory alignment, and energy trade — including European commitments to procure U.S. LNG, oil, and nuclear energy products.
‍

European leaders have now made clear that this framework itself is in jeopardy. Several officials warned that tying tariffs explicitly to territorial or political concessions crosses a line and may justify suspending the deal’s benefits unless the tariff threats are withdrawn.

‍

Why the Trade Deal Matters for Markets

‍

The EU–U.S. relationship remains the largest bilateral trade and investment corridor in the world, with roughly €1.6 trillion in annual goods and services trade and more than €4 billion crossing the Atlantic each day. The 2025 agreement provided clearer tariff ceilings and regulatory guardrails for firms with significant transatlantic exposure.
‍

If the deal is paused or unwound, the impact is likely to be sector-specific rather than economy-wide, concentrated in industries that relied most on tariff ceilings, zero-tariff carve-outs, and regulatory cooperation — and amplified by the fact that the tariffs are now explicitly framed as conditional leverage, not conventional trade policy.

‍

Industrials & Aerospace
‍

• Aircraft and aircraft parts were placed under a zero-tariff regime.
• Companies with heavy transatlantic exposure — Boeing (BA), Airbus (EADSY), Rolls-Royce Holdings (RYCEY), and BAE Systems (BAESY) — face renewed tariff and delivery-risk uncertainty if the deal is suspended.
  ‍

Automotive
‍

• Vehicles were covered by a 15% tariff ceiling with no stacking.
• European automakers with significant U.S. exposure — Volkswagen (VWAGY), BMW (BMWYY), and Mercedes-Benz Group (MBGYY) — would be most sensitive to renewed duties and standards risk.
  ‍

Pharmaceuticals & Chemicals
‍

• Generic drugs, chemical precursors, and related inputs benefited from low or zero tariffs and regulatory cooperation.
• Cross-border operators such as Pfizer (PFE), Merck KGaA (MKGAY), and BASF (BASFY) could see margin pressure if tariff ceilings or mutual recognition are rolled back.
  ‍

Energy & LNG
‍

• The deal supported European purchases of U.S. LNG and energy products.
• Exporters like Cheniere Energy (LNG) and integrated producers such as Exxon Mobil (XOM) face policy and headline risk if cooperation deteriorates.

‍

‍