Canadian Prime Minister Mark Carney publicly backed Kevin Warsh as the next chair of the Federal Reserve on Friday, calling him a “fantastic choice,” in a rare point of alignment amid an escalating U.S.-Canada trade war. “Kevin Warsh is a fantastic choice to lead the world’s most important central bank at this crucial time,” Carney wrote on X shortly after President Donald Trump announced he will nominate the former Fed board member to replace current chair, Jerome Powell. Carney is an experienced central banker himself. He oversaw the Bank of Canada from 2008-2013, briefly overlapping with Warsh’s first tenure as a Fed governor, before leading the Bank of England from 2013-2020. The endorsement stood out as relations between the Trump administration and Canada continue to strain, with Canadian officials warning that Trump’s trade agenda and broader foreign policy are destabilizing both the U.S. and Canadian economies. On Saturday, Trump threatened to impose a 100 percent tariff on Canada if it follows through on a planned trade deal with China. In his latest threat Thursday, he said he would impose a 50 percent tariff on Canadian-made aircrafts after a dispute over aviation certification. “Canada is effectively prohibiting the sale of Gulfstream products in Canada through this very same certification process,” the president wrote on Truth Social. “If, for any reason, this situation is not immediately corrected, I am going to charge Canada a 50% Tariff on any and all Aircraft sold into the United States of America.” Earlier this week, the Bank of Canada said U.S. tariffs are expected to have a “lasting negative impact” on Canada’s economy, citing prolonged uncertainty tied to Trump’s trade policies. “It’s pretty clear that the days of open rules-based trade with the United States are over,” Bank of Canada Gov. Tiff Macklem said. “It’s not a good thing for Americans. It’s not a good thing for Canadians.” In an interview with Reuters on Wednesday, Macklem said Trump’s actions could derail the central bank’s economic forecasts, pointing to Trump’s repeated tariff threats against Canada and other actions abroad, including repeat pressure on Greenland and the capture of Venezuelan President Nicolás Maduro. “There is unusual potential for a new shock, a new disruption,” he said. “Geopolitical risks are elevated.” Macklem also voiced his support for Powell, telling Reuters that he told Powell in a private conversation that he was “doing a good job under difficult circumstances.” Several global central bank leaders, including Macklem, issued a joint statement earlier this month in support of Powell and the Federal Reserve after the Department of Justice launched a criminal investigation into the Fed chair. They warned that political pressure on central banks could undermine global financial stability. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the statement said. “Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest. To us, he is a respected colleague who is held in the highest regard by all who have worked with him.”

The Chinese hoped President Donald Trump’s push for Greenland would help them peel Europe away from America. The Finns were desperate to prevent a trade war over the island. And Iceland was furious over a suggestion that it’s next on Trump’s target list — the “52nd state.” A batch of State Department cables obtained by POLITICO expose the deep reverberations of the president’s demands for Greenland as foreign officials vented their frustrations this month with American counterparts. The messages, which have not been previously reported, offer a behind-the-scenes glimpse into the thinking of allies and adversaries about the impact of Trump’s would-be land grab. They highlight a new point of tension in a transatlantic relationship already strained by Russia’s war in Ukraine, fights over tariffs and U.S. criticism of European policies. And they come just as Trump discusses a framework deal that stops short of allowing the U.S. to own Greenland, but which could expand U.S. military and mining activity in the Danish territory. The cables — perhaps most critically — underscore how important the U.S. remains to so many countries in Europe, even if Trump’s behavior is pushing that continent’s leaders to the edge. “Let’s not get a divorce,” Finland’s Foreign Minister Elina Valtonen said, according to one cable, “especially not a messy one.” A cable from the U.S. Embassy in Beijing on Jan. 21 suggests the Chinese government is eager to benefit from Trump’s moves against Greenland. The situation “offers China an opportunity to benefit from European hedging” and could “amplify trans-Atlantic frictions,” U.S. diplomats wrote in laying out the thinking in China. But the cable, which cites media and analysts affiliated with the ruling Chinese Communist Party, also notes that Chinese leadership was aware that a larger U.S. military footprint in Greenland could complicate their goals in the Arctic and “consolidate U.S. military and infrastructure advantages.” Chinese Embassy spokesperson Liu Pengyu didn’t address the content of the cable directly, but said any Chinese actions were in line with international law. “China’s activities in the Arctic are aimed at promoting the peace, stability and sustainable development of the region,” Liu said. Another cable, dated Jan. 20 from the U.S. Embassy in Helsinki, outlined the concern in the Finland foreign minister’s office over Trump’s threats to impose tariffs on European countries that had sent military advisers to Greenland to plan troop exercises. Valtonen came across as eager to calm tensions. She told visiting U.S. lawmakers that the arrival of a few soldiers in Greenland was a “misunderstanding,” according to the cable. Finland had no plans to do anything “against the Americans” and the officers — “a couple of guys” — were already back in Finland, she said. She downplayed European Union threats to retaliate over the threatened tariffs, calling it a negotiating tactic, and said she’d push the EU to “do anything to prevent a trade war.” The Finnish government did not respond to a request for comment. When asked about the cables, the State Department referred to Secretary of State Marco Rubio’s testimony on Wednesday to the Senate Foreign Relations Committee. He noted that talks between the U.S., Denmark and Greenland have started, and “will be a regular process,” though he didn’t offer any detail. “We’ve got a little bit of work to do, but I think we’re going to wind up in a good place,” he said. “And I think you’ll hear the same from our colleagues in Europe very shortly.” There was also drama in Iceland after Trump’s nominee for ambassador to that country, Billy Long, joked that Iceland could become the “52nd state” — presumably once Greenland became the 51st — and he would act as governor. Iceland’s Permanent Secretary of State Martin Eyjólfsson summoned U.S. Chargé d’Affaires Erin Sawyer to demand a high-level U.S. apology and tell her that such talk “has no place in international discourse,” according to a Jan. 23 cable from the U.S. Embassy in Reykjavík to Washington. Sawyer told him making Iceland a state was not U.S. policy, according to the cable, and pointed out that Long had apologized for the comments. There was no indication Sawyer delivered a high-level apology from the U.S. government as Iceland had requested. The Icelandic Embassy did not respond to a request for comment. Trump last week walked back months of threats about taking Greenland by force and launching a trade war against NATO allies over the issue. He and NATO Secretary General Mark Rutte reached a “framework of a future deal” on Greenland at the World Economic Forum in Davos, Switzerland, Trump announced. The proposals Rutte and Trump have discussed include three main elements. One would allow the U.S. to have full sovereignty over its bases in Greenland, along the lines of Britain’s basing rights in Cyprus, according to a European diplomat and another person familiar with the planning. The U.S. would also be allowed to establish more bases, although Denmark would get a veto over where on the Arctic island, according to the person. They, like others interviewed, were granted anonymity to discuss internal planning. The framework includes the possibility of integrating Trump’s Golden Dome defense shield into plans for a framework as well as a NATO mission focused on the Arctic. The proposal would also give the U.S. first right of refusal on natural resource extraction projects. It’s not clear how long it will take to hash out details or bring Greenland and Denmark on board. Both insist that, whatever happens, they will not compromise on sovereignty. Despite that confident rhetoric, Trump’s threats about Greenland have posed an existential threat for NATO, which rarely sees such intra-alliance feuding. Rutte has moved fast in search of a compromise. He has used NATO’s machinery to his advantage, capitalizing on Europe’s eagerness to keep the alliance together to lobby allies in favor of stepping up work on Arctic security. Rutte was “persistent,” one senior NATO diplomat said. The NATO leader, armed with concrete options he could offer Trump, sought to align national positions. As the crisis escalated, he spent “many days” in calls with national security advisers and leaders, including Danish Prime Minister Mette Frederiksen, French President Emmanuel Macron, Italy’s Giorgia Meloni, German Chancellor Friedrich Merz, Britain’s Keir Starmer and Trump, according to a person familiar with the calls. His efforts led to the session in Davos, which Trump described as “very productive,” and appeared to defuse a potential NATO eruption. But European officials remain worried about the diplomatic situation and uncertain of what Trump seeks. “What we need right now in NATO is unity,” a European official said, “And what the United States is doing is a huge mistake by raising this Greenland topic.” Nette Nöstlinger in Berlin contributed to this report.

BEIJING — Dialogue between the U.K. and China is essential for “world peace,” Chinese President Xi Jinping told Keir Starmer Thursday, heaping praise on Britain’s center-left prime minister as the two men marked a thawing of their relationship. The U.K. prime minister said he wanted “more sophisticated” ties with the world’s second-largest economy, during a visit where he is seeking growth for the British economy and co-operation on issues such as climate change. It is the first visit by a U.K. prime minister to China for eight years, which has proven controversial in Britain due to concerns over Beijing’s human rights record, economic imbalances and accusations of cyber sabotage in Britain by Chinese entities. But in remarks at the start of their meeting in Beijing’s Great Hall of the People, both men avoided difficult issues and heaped praise on each other’s countries. After years of chilled relations under Conservative U.K. governments, Starmer said: “China is a vital player on the global stage and it is vital to build a more sophisticated relationship, where we can identify opportunities to collaborate, but also to allow meaningful dialogue on areas where we disagree.” Communist leader Xi, speaking through an interpreter, singled out Britain’s Labour Party, saying it had in the past “made important contributions to the growth of China-U.K. relations.” He added that there had been “twists and turns that did not serve the interests of our countries” in recent years. Describing the state of the world as “turbulent and fluid,” Xi said more dialogue between the two nations was “imperative,” whether “for the sake of world peace and stability or for our two countries’ economies and peoples.” He added the two men would “stand the test of history” if they could rise above their differences. Acknowledging the furor over China in the U.K., Xi said: “Your visit this time has drawn a lot of attention. Sometimes good things take time. “As long as it is the right thing that serves the fundamental interests of the country and the people, then as leaders we should not shy away from difficulties.” Starmer has tried to take a more measured approach than Canadian Prime Minister Mark Carney, who warned the world order was fractured after his recent trip to Beijing and was later threatened with tariffs by U.S. President Donald Trump. Starmer has insisted he can pursue trade with the U.S., EU and China at the same time in a way that protects national security. The U.K. prime minister said he wanted to focus on “global stability and security, growth and shared challenges like climate change.” Starmer did not raise specific human rights concerns or policy detail during his brief on-camera remarks, though he did make reference to having “meaningful dialogue” on areas where the countries disagree. Ahead of the meeting, Starmer declined to say whether he would raise Russia’s war in Ukraine with Xi, or whether he would ask the Chinese leader to put pressure on Russian President Vladimir Putin to end the fighting. China and the U.K. are due to sign a series of deals later on Thursday. They are expected to cover areas including visa-free travel and mutual recognition of professional qualifications, but collaboration on deeper technology including wind farms appeared less likely.

“Laws that exist only on paper achieve nothing.” This is not a slogan. It reflects the reality described by small-scale fishers and points to a wide gap between European Union commitments and delivery on the water. More than a decade after the last reform of the Common Fisheries Policy (CFP), the EU is once again debating whether to rewrite this policy, even though the CFP’s framework is fit for purpose and delivers sustainable fisheries — when properly applied. What continues to fail is its implementation. The clearest example is the legal commitment to end overfishing by 2020, a deadline still unmet. > If Europe delays action until after another lengthy reform, it risks losing > the next generation of fishers and hollowing out coastal economies. Nowhere is this gap more visible than in the Mediterranean, and particularly in Cyprus and Greece, where stocks are further weakened by the accelerating effects of the climate crisis and the spread of invasive species. The Mediterranean remains the most overfished sea in the world, and small-scale fishers feel these consequences directly. Yet, Cypriot fishers are not asking for weaker rules or a new policy. They are asking for effective enforcement of existing legislation, and support from national authorities. Without these, the future of fisheries as a profession is at stake. If Europe delays action until after another lengthy reform, it risks losing the next generation of fishers and hollowing out coastal economies. Photo by A.S.S. The experience of Cypriot and Greek fishers mirrors a broader European issue. Before reopening the CFP, Europe should take stock of the real gap, which lies not in the law itself, but in its uneven implementation and enforcement. Calls for reform are driven by familiar pressures: environmental safeguards are increasingly framed as obstacles to economic viability and fleet renewal. Reform is presented as a way to modernize vessels and cut red tape. But this framing overlooks lessons from the past. Europe has been here before. Excess capacity and weak controls pushed fish stocks to the brink of collapse, forcing painful corrections that cost public money and livelihoods. For small-scale fishers in the Mediterranean, these impacts are not theoretical. They are experienced daily, through declining catches, rising costs and increasing uncertainty. The Common Fisheries Policy delivers when implemented Evidence shows that where the CFP has been implemented, it delivers. According to European Commission assessments, the share of stocks subject to overfishing in the North-East Atlantic fell from around 40 percent in 2013 to just over 22 percent by 2025. In the Mediterranean, the figure dropped from 70 percent to 51 percent over the same period. These improvements are closely linked to the application of science-based catch limits, effort restrictions and capacity controls under the CFP. > Europe has been here before. Excess capacity and weak controls pushed fish > stocks to the brink of collapse, forcing painful corrections that cost public > money and livelihoods. Economic and social data tell the same story. EU fishing fleets have become more efficient and more profitable over the past decade. Vessels now generate higher average incomes, with wages per full-time fisher rising by more than a quarter since 2013. In its 2023 policy communication, the Commission concluded that the CFP remains an adequate legal framework, with the real gap lying in its application and enforcement. Those involved in the 2013 reform understand why this matters. The revised policy marked a clear shift away from overcapacity and short-term decision-making toward a science-based approach. The European Commission’s own assessments show that this approach delivered results where it was applied. Parts of the EU fleet became more profitable, labor productivity improved and several fish stocks recovered. The CFP remains the EU’s strongest tool for reversing decline at sea. Implementation results in progress; reform leads to instability and uncertainty Strengthening the CPF’s implementation would deliver tangible benefits, including greater stability for fishers and coastal communities, avoiding years of legislative uncertainty, and allowing faster progress toward sustainability objectives. Firm and consistent implementation can enhance economic resilience while restoring ocean health, without the delays and risks that come with reopening the legislation. Given the time and resources required, another round of institutional reform is neither efficient nor necessary. Priority should instead be given to effectively delivering the agreed CFP commitments. Photo by A.S.S. Cypriot Presidency of the Council: a moment for delivery This debate unfolds as Cyprus assumes the EU Council Presidency, at a moment when choices made in Brussels carry immediate consequences at sea. Holding the Presidency brings responsibility as well as opportunity. It offers a chance to help frame the discussion toward making existing rules work in practice, while addressing current implementation challenges. This is where the credibility of the CFP will be tested. > Sustainability and livelihoods move together, or not at all. Reopening the CFP now may send the wrong signal. It may suggest that missed deadlines carry no consequence and that agreed-upon rules are optional. For fishers, it would prolong uncertainty at a time when stability is already fragile. For Europe, it would undermine trust in its ability to deliver. The EU was not conceived to generate endless processes or delay action through repeated legislative cycles. Its purpose is to deliver common solutions to shared problems, and to support people and communities where national action falls short. The last reform of the CFP was built on a simple principle: healthy fish stocks are the foundation of viable fisheries. Sustainability and livelihoods move together, or not at all. This principle is already reflected in Europe’s agreed framework. The task now is to act on it. Fisheries are a clear test of that promise. The law is already in place. The tools already exist. What Europe needs now is the political resolve to deliver on the commitments it has already made. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is OCEANA * The ultimate controlling entity is OCEANA More information here.

LONDON —  Keir Starmer lands in China trying to do everything at once. As his government searches desperately for economic growth, the prime minister’s policy is to cooperate, compete with, and, where appropriate, challenge the Asian superpower. That’s easier said than done. POLITICO asked five China analysts — ranging from former government ministers to ex-diplomats — to give their honest take on how the British PM should handle the days ahead. DON’T LECTURE — VINCE CABLE, FORMER BUSINESS SECRETARY Vince Cable, who visited China three times as U.K. business secretary between 2010 and 2015, says Starmer must not give Chinese President Xi Jinping public lectures. It will be tempting, given China’s human rights record. U.K. lawmakers are particularly concerned about Beijing’s treatment of Uyghur Muslims and Hong Kongers. “From experience, that just antagonizes people. They’ll respond in kind and will remind us about all the bad things the British have done throughout our history. You’ll get absolutely nowhere,” Cable, a former Liberal Democrat leader who wrote “The Chinese Conundrum: Engagement or Conflict” after leaving office, said.  Raising concerns in private is more likely to get a positive result, he thinks. “Although I’m by no means an admirer of President [Donald] Trump … his approach, which is business-like and uses actually quite respectful language in public, has actually had far more success in dealing with the Chinese than the traditional missionary approach of some Western European countries,” Cable adds.  LISTEN AND SPEAK UP — BEN BLAND, CHATHAM HOUSE ASIA-PACIFIC PROGRAM DIRECTOR Ben Bland, director of the Chatham House think tank’s Asia-Pacific program, warns there can’t be a return to the “naive optimism” of the “golden era” under Cameron. Britain should “listen to the Chinese leadership and try and understand more about how [Chinese President] Xi Jinping and other senior communist leaders see the world, how they see China,” the former Financial Times South China correspondent says. “The U.K.’s ability to influence China directly is quite limited, but it’s really important that we understand what they’re trying to do in the world.” Starmer should be clear about the U.K.’s red lines on espionage, interference in British society, and the harassment of people living in this country, Bland says. Vince Cable, who visited China three times as U.K. business secretary between 2010 and 2015, says Starmer must not give Chinese President Xi Jinping public lectures. | Andy Rain/EPA TREAT TRADE CAUTIOUSLY — CHARLES PARTON, FORMER DIPLOMAT “The Chinese are adept at the propaganda of these visits, and ensuring that everything seems wonderful,” Charles Parton, an ex-diplomat who was First Counsellor to the EU Delegation in Beijing between 2011 and 2016, warns.   “There’s an awful lot of strange counting going on of [investment] deals that have already been signed, deals that are on the cards to be signed [and] deals that are glimmers in the eye and almost certainly won’t be signed,” Parton, now an adviser to the Council on Geostrategy think tank, says. “Trade is highly fungible. It’s not political,” Parton, who is also a senior associate at the Royal United Services Institute, adds. “We shouldn’t be saying to ourselves ‘oh my gosh, we better knuckle down to whatever the Chinese want of us, because otherwise our trade and investment will suffer’,” he believes. “If you can push through trade investment which is beneficial — excellent. That’s great, but let’s not think that this is the be-all and end-all,” he warns. SEE CHINA AS IT IS — LUKE DE PULFORD, INTER-PARLIAMENTARY ALLIANCE ON CHINA EXECUTIVE DIRECTOR  Luke De Pulford, executive director of the hawkish global cross-party Inter-Parliamentary Alliance on China, is skeptical about the timing of Starmer’s China trip —  a week after ministers gave planning approval for Beijing’s controversial mega embassy in London. “Going to China against that backdrop, to look as if you’re going to make national security concessions in the hope of economic preferment, is unwise,” he says. He is also doubtful that closer ties with Beijing will improve the British economy. “All of the evidence seems to point towards China investing in the U.K. only in as far as it suits their strategic interests,” De Pulford says. “There’s a lot to lose and not very much to gain.”  Prioritizing the U.K. agenda will be paramount for Starmer. “There’s nothing wrong at all with visiting China if you’re going to represent your interests and the United Kingdom’s interests,” he says, while remaining doubtful that this will be achieved. SET OUT A CHINA STRATEGY — EVIE ASPINALL, BRITISH FOREIGN POLICY GROUP DIRECTOR  Securing a “symbolic, long-term relationship” with China should be a priority for Starmer, Evie Aspinall, who leads the non-partisan British Foreign Policy Group think tank, says. She wants the U.K.’s China Audit to be published in full, warning businesses “don’t have a strong understanding of what the U.K.’s approach is.”  The audit was launched in late 2024 to allow the government to understand Beijing’s threats and opportunities, but its findings have not been published in detail because much of its content is classified. “I think that’s a fundamental limitation,” Aspinall says, pointing out it is businesses which will generate the growth Starmer wants.  U.K. businesses need to know they “will be supported around some of those risks if they do decide to engage more closely with China,” she says.   

BRUSSELS — The European Parliament has postponed its decision to unfreeze the EU-U.S. trade deal — but signaled it would do so at a later date. After two and a half hours of closed-door talks on Monday, the Parliament’s top trade lawmakers failed to agree whether to put the transatlantic deal to a vote. This despite calls from EU countries last week to unblock the implementation because U.S. President Donald Trump had walked back his threats to seize Greenland. “Of course we want the deal,” said Social Democrat lawmaker Kathleen van Brempt after the meeting. But “we need clarity” on the agreement Trump said he struck with NATO that ultimately convinced him to back down. The Parliament froze ratification of the agreement, signed by Trump and European Commission President Ursula von der Leyen in July, after the U.S. president threatened tariffs on European allies backing Greenland. Lead negotiators will meet Feb. 4 to decide next steps, the Parliament’s International Trade Committee Chair Bernd Lange said. At the meeting, lawmakers broadly agreed that the deal should go ahead now Trump has backtracked. But political groups are divided on whether they should first play hardball with the U.S. and demand more details on the NATO-Trump agreement, according to four people familiar with the talks. The center-right European People’s Party wants to “move forward” as soon as possible as it is “best for businesses … to create some more stability,” said the EPP’s top trade lawmaker, Jörgen Warborn. The right-wing ECR group and the far-right Patriots also pushed for work on the deal to continue. But the Socialists, the liberals of Renew and the Greens want to play it tougher, and want to see more details of the Greenland deal first, pointing to Trump’s unpredictability. “The guy threatened with tariffs, then he did not,” S&D’s van Brempt said, adding that the Socialists want to know where the European Commission stands on using the Anti-Coercion Instrument — it’s most powerful trade weapon — that it moved closer to readying before Trump walked back his tariff threats. “Improved U.S.-EU trade relations are of the highest importance, but must be built on mutual respect,” top liberal trade lawmaker Karin Karlsbro told POLITICO. “The door is open, but there is no need to rush the timetable.” A senior Commission trade official told the meeting the executive wants to accelerate the deal after Trump’s turnaround. “The Commission is falling back to their old position now,” said an MEP who was in the room, granted anonymity to speak about the confidential meeting, adding the Parliament needs to push for the Commission to “keep the pressure high” on Washington. Lawmakers also discussed whether to formally ask the Commission to launch the first, investigative stage of the Anti-Coercion Instrument, but there was not a majority to do so, the chair of the U.S. delegation Brando Benifei said.

Russian President Vladimir Putin said he is considering U.S. President Donald Trump’s invitation to the Gaza Board of Peace — but did not agree outright.  He thereby appeared to directly contradict Trump who, on Wednesday evening, said the Russian president had already signed up to join.  Speaking during a video call with members of Russia’s Security Council on Wednesday, Putin thanked Trump for the personal invite, saying “we have always supported, and continue to support, any efforts aimed at strengthening international stability.”  He added he’d ordered Russia’s foreign ministry to review the document and to “consult with our strategic partners.” Thanking Trump for his role in mediating the “Ukraine crisis” — a Kremlin euphemism for its full-scale invasion — Putin emphasized the Board of Peace would mainly focus on the Middle East.  He also suggested the U.S. tap into frozen Russian assets in lieu of the $1 billion payment to be paid by countries who want to join Trump’s group, “in view of Russia’s special relations with the Palestinian people.” “The remainder of our frozen assets could be used for the reconstruction of territory that has suffered from combat after the reaching of a peace deal between Russia and Ukraine,” Putin said.  The Russian president said that option would be discussed during a meeting in Moscow on Thursday with U.S. envoys Steve Witkoff and Jared Kushner.  Earlier on Thursday, Putin was also scheduled to meet with Palestinian President Mahmoud Abbas.

After two weeks of escalating threats toward Europe, President Donald Trump blinked on Wednesday, backing away from the unthinkable brink of a potential war against a NATO ally during a speech at the World Economic Forum in Davos. Trump’s vow not to use military force to seize Greenland from Denmark eased European fears about a worst-case scenario and prompted a rebound on Wall Street. And his declaration hours later after meeting with NATO’s leader that he may back off of his tariff threat having secured the “framework” of an agreement over Greenland continued a day of backpedaling on one of the most daring gambits of his presidency to date. But his continued heckling of allies as “ungrateful” for not simply giving the U.S. “ownership and title” of what he said was just “a piece of ice” did little to reverse a deepening sentiment among NATO leaders and other longtime allies that they can no longer consider the United States — for 80 years the linchpin of the transatlantic alliance — a reliable ally. “The takeaway for Europe is that standing up to him can work. There is relief, of course, that he’s taking military force off the table, but there is also an awareness that he could reverse himself,” said a European official who attended Trump’s speech and, like others interviewed for this report, was granted anonymity to speak candidly. “Trump’s promises and statements are unreliable but his scorn for Europe is consistent. We will have to continue to show resolve and more independence because we can no longer cling to this illusion that America is still what we thought it was.” Trump’s abrupt about-face after weeks of refusing to take military intervention off the table comes a day after Greenland shock waves sent global markets plunging, wiping out over $1.2 trillion in value on the S&P 500 alone. The president’s policy shift mirrored a similar moment in April, when he quickly reversed sweeping tariffs after a market downfall tied to his policies. If Trump’s refusal to use the military to threaten Greenland and the U.S.’s NATO allies holds, it would represent a win for administration officials such as Treasury Secretary Scott Bessent, who on Tuesday counseled the Davos set not to overreact or escalate the fight with Trump, assuring concerned Europeans that things would work out soon. The threat of force appeared to have the strong backing of deputy chief of staff Stephen Miller, who offered the most forceful articulation of those desires in an interview this month where he claimed that America was the rightful owner of Greenland and insisted the “real world” was one “that is governed by force, that is governed by power.” But Miller aside, most saw the threat of force as an attempt to create leverage for an eventual negotiation. If Trump were to have pursued using military force, there could have been pushback from his closest allies like Secretary of State Marco Rubio and Vice President JD Vance, said a person close to the administration and granted anonymity to describe the private dynamics. “Do some senior administration people talk to their best friends in conservative world and media and basically say, ‘Yeah, I don’t know why we’re doing this?’ Sure, but I think those are all in confidence,” the person said. Increasingly, Europeans have been voicing their growing fears aloud. When Trump arrived in the snowy Swiss Alps Wednesday afternoon for this annual confab of business and political titans, the West remained on edge after the president announced last weekend that he intended to increase tariffs on several European countries that had sent troops to Greenland for military exercises. As they contemplated the fact that an American president was threatening the territorial sovereignty of one ally and turning to economic coercion tactics against others, European leaders strategized openly about retaliating in kind. That posture marked a major shift from Trump’s first year back in office, when European leaders put up a fight but ultimately and largely accepted his terms — NATO begrudgingly agreeing to spend more on defense, taking on all of the financial burden for Ukraine aid and the European Union accepting a 15 percent tariff on all exports to the U.S. — in order to keep the president from breaking with the alliance and abandoning Ukraine. But the president’s brazen challenge to Denmark over Greenland and shocking disregard for Europe’s territorial sovereignty amounted to a disruption that is orders of magnitude more concerning. Demanding that Denmark, a steadfast NATO ally, allow him to purchase Greenland — and, until Wednesday, holding out the prospect of using military force to seize it — threatened to cross a red line for Europe and effectively shatter 80 years of cooperation, upending an alliance structure that America largely built to avoid the very kind of imperialistic conquest Trump suddenly seems fixated on pursuing. “We’ve gone from uncharted territory to outer space,” said Charles Kupchan, the director of European studies at the Council on Foreign Relations and a former adviser to President Barack Obama. “This is not just strange and hard to understand. It borders on the unthinkable, and that’s why you’re seeing a different response from Europe than before Greenland was center stage.” Trump’s social media posts last weekend announcing that he intended to increase tariffs on the European countries that had sent troops to Greenland for training exercises drew harsh public responses from heads of state across Europe and prompted a flurry of private phone calls and even text messages — some of which the president shared on social media — urging him to work with them more constructively to address security in the Arctic. That didn’t stop Trump on Wednesday from continuing to assert an intention to acquire Greenland through negotiations, despite an overwhelming majority of Greenlanders being opposed to living under U.S. control. “Let’s not be too cheerful on him excluding violence, as that was outrageous in the first place,” said a second European official in Davos. “And his narrative on Greenland is BS. It should be called out.” Trump, who met with European leaders to discuss Greenland on Wednesday afternoon, suggested in his remarks that the U.S. acquiring the massive island between the Arctic and North Atlantic was in the best interests of Europe as well as America’s. “It’s the United States alone that can protect this giant, massive land, this giant piece of ice, develop it and make it so that it’s good for Europe and safe for Europe,” he said. “You can say yes, and we will be very appreciative, or you can say no and we will remember,” Trump continued. Those words did not appear to fully allay the growing anxieties of democratic leaders that the world is spinning in a new and frightening direction, away from decades of relative peace and stability and back to a prewar era of global conquest. Canadian Prime Minister Mark Carney, addressing Davos on Tuesday ahead of Trump’s arrival, was emphatic in declaring that there is no going back. “Every day we are reminded that we live in an era of great power rivalry,” Carney said. “That the rules-based order is fading. That the strong do what they can, and the weak suffer what they must.” Calling for democratic nations to take steps to lessen their reliance on the U.S. and their vulnerability to pressure from this White House, Carney urged other leaders to accept a new reality that, in his view, the longstanding postwar order was already gone. “Let me be direct: We are in the midst of a rupture, not a transition.” Trump made it clear on Wednesday that he saw Carney’s remarks, alluding to Canada’s reliance on the U.S. and going as far to suggest that its safety continues to depend on American defense technology. “They should be grateful to us,” he said. “Canada lives because of the United States. Remember that, Mark, next time you make your statement.” The implied threat, in a way, may have underscored the Canadian leader’s point. With persistent threats of higher tariffs from the White House even after Trump backed off his saber rattling over annexing the country, Canada has looked to rebalance its trade relationships with other countries, including China, to reduce its economic dependence on the U.S. In Europe, leaders may be following suit. Just last week, Brussels approved a landmark free trade agreement with the Mercosur bloc of South American countries, a long-sought deal that took on greater urgency in recent months to provide Europe with a bulwark against Trump’s protectionism and coercive economic measures. There is still hope in Europe that Trump will eventually accept something less than U.S. ownership of Greenland, especially after his apparent walkbacks Wednesday on the threats of tariffs and military force. That could include accepting a standing offer from Denmark to boost America’s military presence on the island, not to mention economic cooperation agreements to develop natural resources there as climate change makes mineral deposits more accessible. But European leaders increasingly seem to accept that there are limits to their ability to control Trump — and are looking to hedge their reliance on the U.S. as urgently as possible. Anders Fogh Rasmussen, the former Danish prime minister and secretary general of NATO, wrote this week that it’s time for Europe to shift its posture toward the U.S. from one of close allies to a more self-protective stance defined by a stronger military and reciprocal tariffs. “Mr. Trump, like Vladimir Putin and Xi Jinping, believes in power and power only,” he wrote, likening the U.S. president to the leaders of Russia and China. “Europe must be prepared to play by those same rules.” Trump’s threats against Denmark have obliterated the long-held view about the U.S., that after 80 years of standing up to imperialist conquerors from Adolf Hitler’s Germany to Saddam Hussein’s Iraq, Washington would always be the tip of the spear when it came to enforcing a world order founded on shared democratic ideals. Suddenly, that spear is being turned against its longtime allies. “The jewel in the crown of our power and of our role in the world has always been our alliance system,” said Jeremy Shapiro, a veteran of the State Department under the President Barack Obama administration who is now a fellow at the European Council on Foreign Relations in Washington. Shapiro noted that the U.S. has at times still employed hard power since the end of World War II, especially in its own hemisphere. But overall, American foreign policy has largely been defined by its reliance on soft power, which he said “ is much less expensive, it is much less coercive, it is much more moral and ethical, and it’s more durable.” Returning to the law of the jungle and a world where larger powers gobble up smaller ones, Shapiro continued, will make the U.S. more like Russia and China — the two countries he claims threaten U.S. interests in Greenland — and weaker over the long term. “Moving from our trusted methods to Putin’s methods is worse than a crime,” he said. “It’s an idiocy.”

BRUSSELS — The trade war is back. Donald Trump’s threat to impose tariffs on European countries over Greenland has blown up last year’s transatlantic trade truce and forced the EU into a familiar dilemma: hit back hard, or try to buy time.  On paper, Brussels has options. It could target politically sensitive U.S. exports like Republican-state soybeans. Or it could unleash its trade “bazooka,” the Anti-Coercion Instrument. Here are the actions that EU leaders can consider when they gather for an emergency summit on Thursday: HITTING BACK AGAINST U.S. PRODUCTS Retaliatory tariffs on €93 billion worth of U.S. goods are still sitting in the EU’s pantry. These date back to Trump’s first round of tariffs last year and were frozen for six months in August. This package will automatically kick into force on Feb. 7 unless the Commission proposes to extend the freeze and the 27 EU countries agree with that. Such a suspension can happen very quickly, however, as the Commission typically sounds out support from capitals several times a week. Part of the package targets distinctively American products like Levi’s jeans, Harley Davidson motorcycles and Kentucky bourbon. Other goods would be targeted because they originate in states that lean towards the Republican side of the spectrum. A tariff on soy beans, for instance, would target the red state of Louisiana from which House Speaker Mike Johnson hails. DEPLOYING THE TRADE “BAZOOKA” The biggest weapon in the EU’s arsenal is its Anti-Coercion Instrument. This all-purpose tool is meant to deter other countries from using trade tactics to extort concessions in other areas. With it, Brussels can impose or increase customs duties, restrict exports or imports through quotas or licenses, and impose restrictions on trade in services. It also can curb access to public procurement, foreign direct investment, intellectual property rights and access to the bloc’s financial markets.  But in a case like this, it would take a few months to first clear diplomatic hurdles between the Commission and the Trump administration. Because it has never been triggered before, the EU is in uncharted waters. That is especially true for the dynamics between the Commission and national capitals. Brussels needs to propose launching the mechanism, and would only do so if it knows enough capitals will agree. France is keen, but Germany and other countries? Not so much. Thomas Lohnes/Getty Images “It’s one of the cards,” but “it’s really not the first in the line that you use,” Lithuanian Finance Minister Kristupas Vaitiekūnas told POLITICO in an interview. PLAYING THE CHINA CARD Canadian Prime Minister Mark Carney did something unprecedented last Friday. Turning the page on the acrimonious relationship between Canada and China born out of the arrest of a high-profile Huawei executive, the Canadian leader struck a preliminary trade deal with Beijing to liberalize imports of Chinese electric vehicles in exchange for a steep reduction in tariffs on Canadian agricultural goods. Carney didn’t mention Trump by name, but the message was clear: Canada has other partners, and it won’t sit quietly while Washington tries to strong-arm it.   A blueprint for Brussels? It’s not that simple. While the EU has tried to thread the needle on its trade relations with Beijing — the Asian country remains its second-largest trading partner  — policymakers are keenly aware of the competitive threat posed by China, Inc. Germany’s automotive industry is reeling from high energy prices and fierce competition from China (now the world’s top automotive exporter). In general, overcapacity — the term for China’s dizzying output of products that, unable to be absorbed by its domestic market, are sold abroad — keeps EU business leaders up at night. Compared with Canada, for the EU China is a “whole different can of worms,” said trade expert David Kleimann. “The Chinese are outcompeting us on all of our main exports and domestic production,” he said. “We will need more barriers, more managed trade with China.”  AN ASSET FIRESALE America’s enormous debt pile is one Achilles heel. The U.S. loves to spend, and Europeans, in turn, snap up that debt. George Saravelos, head of foreign exchange research at Deutsche Bank, said that European public and private sector entities hold a combined total of $8 trillion of U.S. stocks and debt — “twice as much as the rest of the world combined.”  “In an environment where the geoeconomic stability of the western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part,” the analyst wrote in a note to clients. If European governments order their banks and pension funds to dump their holdings, that would almost certainly spark a financial crisis, sending America’s borrowing costs soaring. The ensuing financial Armageddon would engulf Europe as well, though. The firesale of financial assets would crush prices, and European lenders would book huge losses — the financial equivalent of nuclear mutually assured destruction.  Increasing decoupling from the U.S. financial system looks likely, but a violent wholesale break is extremely unlikely.  PLAYING FOR TIME Restraint is the EU’s weapon of choice for now. “The priority here is to engage, not escalate, and avoid the imposition of tariffs,” Olof Gill, deputy chief spokesperson for the European Commission, said on Monday. Under their trade deal struck last year, the United States has already lowered tariffs on most EU products to 15 percent, while the EU has yet to make good on its pledge to cut its tariffs on U.S. industrial goods to zero. That’s because Trump’s threats have derailed a vote in the European Parliament on lowering tariffs for U.S. products. While this stalemate lasts, EU companies actually benefit from lower costs while the reverse is not true for their American counterparts. “Trade continues to flow, investment continues to flow,” Gill added. “So we need to be very sensible in how we approach the difference between a threat and operational reality.” With Trump trying to drive a wedge between European leaders by threatening tariffs against some countries, including France and Germany, while sparing others, like Italy, maintaining cohesion will be a huge challenge. Any serious retaliation, such as wielding the bloc’s trade “bazooka,” the Anti-Coercion Instrument, would require very broad support. WHAT COMES NEXT The U.S. Supreme Court might rule on some of Trump’s tariffs as soon as Tuesday. If the administration loses the case, Trump would have to deal with the fallout while he’s attending this week’s World Economic Forum in Davos.  “On a purely economic warfare basis, that would play in our favor,” said Kleimann. “But we haven’t considered Trump’s ambitions to actually put boots on the ground.” At Davos, Trump might meet with Commission President Ursula von der Leyen, although no bilateral is yet confirmed. Von der Leyen will speak at Davos on Tuesday; Trump is due to arrive the day after.  Then on Thursday, EU government leaders hold an emergency summit in Brussels to discuss transatlantic relations and the latest tariff threats. The meeting is not expected to create a glitzy attack plan but rather to sound out whether the EU should indeed target the U.S. goods or maybe shoulder its trade bazooka. By Feb. 1, the U.S. tariffs on the European allies would kick in, if Trump follows through on his threats. A week later, the EU’s retaliation package automatically kicks in if no solution is found. If that happens, we really will be in a trade war.

Former European Central Bank President and ex-Italian Prime Minister Mario Draghi has been awarded the International Charlemagne Prize of Aachen, as the EU grapples with how to stay relevant in a harsher global order. Organizers announced the 2026 winner Monday, citing Draghi’s “historic services” to European integration and his renewed role in shaping the bloc’s economic future. He will be formally awarded at a ceremony on May 14. The timing of the award is deliberate. Europe risks becoming “a pawn in the game of other powers” unless it can secure its sovereignty, the prize committee warned, adding that competitiveness and economic strength are essential for a sovereign Europe. “Mario Draghi holds a key role in strengthening Europe’s economy, and his 2024 Draghi Report outlines the plans needed to ensure competitiveness, growth, and stability in the European Union,” it said. The Draghi report, which calls for “radical change” to EU decision-making, sends a clear message: Europe can no longer rely on crisis management alone. “This new world is not kind to us,” Draghi warned last year. “It does not wait for slow, collective rituals.” The prize committee urged EU governments and the Commission to implement Draghi’s recommendations “immediately,” framing the report as a blueprint for survival rather than another Brussels white paper. The Charlemagne Award honors individuals or institutions that have made an outstanding contribution to European unity, peace and integration. Recent winners include Ukrainian President Volodymyr Zelenskyy and the Ukrainian people, Chief Rabbi Pinchas Goldschmidt and the Jewish communities in Europe, and European Commission President Ursula von der Leyen. Draghi was an inevitable candidate, ever since he pledged to do “whatever it takes” as ECB president at the height of the sovereign debt crisis in 2012. The pledge is often credited with ensuring the survival of the single currency. A year after stepping down as ECB president 2019, Draghi, 78, was tapped by President Sergio Mattarella to form a “government of national unity” following the collapse of Italy’s Giuseppe Conte-led government.  His success leading Italy through the Covid-19 crisis and engineering an economic rebound was so striking that The Economist named Italy its 2021 “Country of the Year,” crediting Draghi’s leadership.