Would the US imposing high tariffs on Denmark bring it Greenland? If it did, at what cost?

In 1940, the United Kingdom, desperate for assistance to push back against economic strangulation caused by Germany’s aggressive U-boat campaign, gave the United States 99-year leases to territory in Newfoundland and the Caribbean in exchange for 50 aging Navy destroyers the United States transferred to the British Royal Navy. The United States used the leased land for military bases informally for mutual defense. Today, President Donald Trump clearly appears to have determined that American sovereignty over Greenland is essential to assure US national security.

We are no longer used to nations seeking territorial expansion as normal, having gotten accustomed to the doctrine of self-determination, a cardinal principal of the United Nations. But historically, countries have been known to transfer large swaths of distant territory from rule by one sovereign to rule by another. In fact, this happened a century ago to a substantial piece of Greenland, a transfer that was the subject of a famous case that came before the Permanent Court of International Justice (PCIJ) in 1933. On July 22, 1919, the Norwegian foreign minister, Nils Claus Ihlen, sitting in a conference convened to discuss Danish sovereignty, stated: “The plans of the Royal [Danish] Government respecting Danish sovereignty over the whole of Greenland...would be met with no difficulties on the part of Norway." Denmark for its part agreed not to object to any Norwegian claim to Spitzbergen, an island in the Arctic Ocean, that Norway might submit at an upcoming peace conference if Norway did not oppose the Danish claim at the same conference to the whole of Greenland. At the time, Norway occupied parts of East Greenland. This exchange became known as the Eastern Greenland Case and the words spoken by the Norwegian foreign minister as the Ihlen Declaration. The Court held that the Norwegian foreign minister's words were binding.

How will the 2025 issue of sovereignty over Greenland play out? The prime minister of Denmark had a testy exchange with President Trump this last week, again saying Greenland was not for sale. For their part, a significant number of Greenlanders (population 56,865) favor independence, even though Denmark provides half their budget. The International Court of Justice (successor to the PCIJ) will not necessarily play a decisive part in this question, as the United States does not recognize its compulsory jurisdiction over American actions. Trump, unsurprisingly, has threatened tariffs on Danish products.

What products would likely be involved? For most American consumers, what probably comes to mind are canned hams, cheese, and Danish butter cookies. The trade data for the $12 billion in annual US imports from Denmark show greater complexity. The top categories of these imports do not include the three popular consumer products. Instead, they are a variety of products a consumer would not necessarily identify as being particularly Danish in character, including: pharmaceuticals, blood, and medicines; machinery; nuclear reactors, boilers; optical, photo, technical, medical apparatus; electrical electronic equipment; and albuminoids, modified starches, glues, enzymes, and organic chemicals. These products account for some 90 percent of US imports from Denmark. What impact an additional tariff would have on this trade is impossible to assess in the abstract. Are there non-Danish sources of supply for these products? How fungible are parts of nuclear reactors or parts for a particular type of medical device? The harm to the United States from higher American tariffs might be greater than the harm to Denmark.

On the other side of this equation, are US exports in fact vulnerable to retaliation, enough to cause the United States to back off? Denmark is a rapidly growing but small market for US goods, accounting for $4.6 billion in 2022, the largest categories being crude and refined petroleum, followed by planes, helicopters, and spacecraft. Out of over $2 trillion in total US exports (merchandise trade), this is a drop in a bucket. However, it is not Denmark that would have the right to impose trade retaliatory measures but the European Union (as it moved to do when China chose to impose economic pain on Lithuania for its allowing the opening of a representative office of Taiwan using that name). The European Union takes about 18 percent of US goods exports. It has some clout. It did not stand idly by (nor pay much attention to international trade rules) when the United States restricted imports of steel and aluminum under a claim of national security during the first Trump administration. Could the United States withstand EU retaliation? It did then and could do so again.

Does the US president have the legal authority to use tariffs to attempt to get Greenland to go along with a land transfer? While the Congress may never have envisaged anything remotely like this use, it gave broad powers to the president under the International Economic Emergency Act (IEEPA, 1977). If the president declares an international economic emergency over the Greenland issue and restricts Danish trade in the form of tariffs, what might stop him from doing so? The Congress could repeal the emergency by joint resolution, but it has not come close in the last 50 years to doing so without presidential acquiescence in the 70 emergencies declared by presidents under this statute. Would this Congress act against this president over the fate of Greenland? Not conceivable. Would this Supreme Court (or any Supreme Court) try to second guess the president on a matter of national defense? (One did: President Truman could not nationalize the country’s steel mills during the Korean War to overcome a strike by workers. But that is exceptional. Most court decisions support presidential declarations of national emergency.)

Would America’s closest allies convince the two countries to work out something short of a transfer of land under threat of trade sanctions? In 1917, during World War I, the Danish government agreed to a transfer of the Danish West Indies to the United States under threat of US occupation to save it from German control. The territory is now the US Virgin Islands, acquired for a price of $25 million in gold coins (about $616 million in today’s dollars). The United States has considered off and on trying to buy Greenland since the 1860s, at the time of the purchase of Alaska from Russia.

The assumed norms of international conduct in international relations may no longer preclude changes in borders by force. What looks like an action required for national defense in one circumstance may be taken by others to be a permission slip with potentially disastrous consequences. Setting a 21st century precedent for using economic coercion to change borders is extremely dangerous. Trying to force a land transfer in this hemisphere would likely have disastrous repercussions in other parts of the world.

The rules of the international trading system have had declining effect over the last eight years and may have little traction left. Nor are there clear rules to govern geopolitical contests. Even the current discussion can damage NATO, and that too must be taken into account.