Trump is threatening to punish eight countries including Denmark with tariffs over their opposition to his plan to seize control of Greenland.
The US president has accused Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland of playing a "very dangerous game" after they sent a few dozen troops to the island as part of a military drill.
On Sunday, Trump threatened to impose a 10-percent tariff from February 1st on all goods sent to the United States from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.
That levy would then be increased to 25 percent on June 1st "until such time as a deal is reached for the complete and total purchase of Greenland", he said.
‘Well equipped, but not invulnerable’
Danish national broadcaster DR’s economy correspondent Casper Schrøder wrote in an analysis on Monday that the Nordic country might be “well equipped” to cope with the punitive tariffs, should they become a reality, but is not “invulnerable”.
However, Trump would have some difficulty directly targeting Danish businesses with the tariffs, he wrote.
There are several reasons for this, including Denmark’s membership of the EU’s customs union, which means that punitive tariffs can’t be placed on individual countries within the customs union.
Non-EU country Norway, which has also been threatened with tariffs by Trump, was reported on Monday to be considering joining the customs union as a method to help insulate itself against the potential levies.
Meanwhile, tariffs against the EU as a whole run the risk of a reciprocal move against the US by the EU, which could harm the US economy and businesses.
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Additionally, Schrøder notes that a large proportion, around 75 percent, of Danish products that are sold in the United States – and form part of Danish export statistics – are actually produced in the United States. This means they would not be liable for the tariffs.
This is the case for major Danish companies such as Novo Nordisk and Lego, which have production in South Carolina and in Mexico, respectively.
The emergency decrees used by Trump to apply tariffs on other countries’ imports – the likely method that would be used against Denmark and the other European countries – could potentially be annulled in an upcoming ruling at the US Supreme Court.
While it is far from certain the Supreme Court will rule against Trump, this situation would make it harder for him to enact new tariffs.
Nevertheless, tariffs of 10 percent and later 25 percent, as threatened by Trump, would be felt in Denmark, particularly by small and medium-sized companies which rarely have large factories in the United States.
So while the threats in isolation are not likely to crash the Danish economy, some of the country’s companies may well be looking on with considerable concern.
The Confederation of Danish Industry (DI) has estimated that 25 percent tariffs could cost around 16,000 jobs in Denmark.
This estimate is highly uncertain given the uncertainty of how the situation will develop, it noted.
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