European Union leaders are preparing a sweeping response to escalating pressure from US President Donald Trump over Greenland, with Brussels considering up to €93 billion in retaliatory tariffs and potential restrictions on US companies’ access to the EU’s internal market.

The measures are being developed as leverage ahead of high-stakes talks with the US at the World Economic Forum in Davos, where European leaders hope to defuse what is shaping up to be the most serious transatlantic crisis in decades. EU officials have described the situation as a direct challenge to European sovereignty and collective security.

The tariff list, covering €93 billion worth of US goods, was originally prepared last year but suspended to avoid triggering a trade war. EU ambassadors revisited the package this weekend, alongside discussions on deploying the bloc’s anti-coercion instrument — a powerful legal tool that allows the EU to restrict investment and services access for companies from countries applying economic pressure.

Financial markets reacted swiftly to the rising tension. European equity futures fell sharply, while gold surged to record highs as investors sought safe-haven assets, signalling growing concern over the stability of the transatlantic relationship.

Trump has repeatedly demanded permission from Denmark to take control of Greenland, a strategically important Arctic territory rich in natural resources. He has also threatened new tariffs on countries that oppose his position, including EU member states involved in recent military exercises in the region.

European capitals are divided between pushing for immediate retaliation and keeping the door open to dialogue. While France and Germany are coordinating a joint response and have advocated the use of the anti-coercion instrument, other member states are urging caution, stressing the importance of reducing tensions before resorting to punitive measures.

The issue has also prompted institutional action. The European Parliament has delayed votes on measures that would have lowered tariffs on certain US goods, signalling that trade concessions are now off the table while the dispute remains unresolved.

Malta is expected to be represented at the forthcoming round of talks in Brussels, with Prime Minister Robert Abela set to join other EU leaders for emergency discussions on how to respond collectively to the US stance. The meeting is expected to focus on safeguarding EU unity, protecting the sovereignty of Denmark and Greenland, and preventing further escalation.

European leaders have reiterated their commitment to defending the territorial integrity of EU member states and associated territories, while also emphasising that the bloc is prepared to use all available tools to protect its economic and security interests if necessary.

With further meetings scheduled in the coming days, the direction of EU–US relations may hinge on whether a diplomatic off-ramp can be found — or whether Europe moves ahead with the most significant trade retaliation against the United States in recent history.