[Market Analysis] Trump says "Will not sell Greenland, will hit with tariffs" ... The economies of 8 European countries are inevitably affected

President Donald Trump has issued a “tariff card” to the eight major European countries over the purchase of Denmark’s autonomous territory, “Greenland.” President Trump announced that high tariffs will be imposed on relevant countries until an agreement is successfully reached for the U.S. to acquire Greenland, which is expected to cause a stir.

According to information released over the weekend, the U.S. plans to impose a 10% tariff on imports from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland starting February 1. President Trump specifically threatened that if an agreement is not reached by June 1, the tariff rate will be raised to 25%.

◇ European exports of 270 billion euros face impact… German economy “in distress”

According to Goldman Sachs analysis, if these tariffs are implemented, about half of the EU’s exports to the U.S., approximately 270 billion euros annually (about 400 trillion Korean won), will be affected.

Goldman Sachs’ economic team predicts: “If a 10% tariff becomes a reality, trade reductions will impact the relevant European countries’ real Gross Domestic Product (GDP), which could decline by 0.1-0.2%.”

Among countries, Germany is expected to suffer the greatest blow. If tariffs are applied reciprocally, Germany’s GDP is expected to decrease by 0.2%; if a uniform tariff is applied to all goods, the maximum GDP decline could reach 0.3%. The overall Eurozone and the UK are expected to see GDP decline by about 0.1%.

If, as President Trump warned, tariffs are raised to 25% in June, GDP losses could expand to 0.25-0.5%. This is an additional impact on top of last year’s 0.4% GDP decline caused by U.S. tariffs.

◇ Mild inflation impact… but pressure to cut interest rates may increase

Analysis suggests that the impact on inflation will be limited. It is believed that reduced demand will offset upward pressure on prices.

Goldman Sachs forecasts: “When applying the central bank’s monetary policy benchmark ‘Taylor Rule,’ due to slowing growth and lower inflation pressures, policy interest rates may actually decrease slightly.”

◇ EU’s three-stage retaliation scenarios… “Selling U.S. assets” also quietly circulating

Europe’s response measures are also under close watch. Goldman Sachs predicts three possible retaliation measures by the EU.

1. Delay trade agreements: i.e., suspend the implementation of the U.S.-EU trade agreement reached last year. Since approval from the European Parliament is required, this is the easiest card to play.

2. Reciprocal tariffs: i.e., impose retaliatory tariffs on U.S. steel, aluminum, agricultural products (soybeans, orange juice), motorcycles, etc. The previously prepared tariff list worth up to 93 billion euros (including aircraft, automobiles) may be revisited.

3. Launch anti-coercion tools: These can include the “Counter-Coercion Tool” designed to respond to economic threats. This includes not only tariffs but also broad non-tariff barriers such as investment restrictions on U.S. assets and digital services taxation.

Deutsche Bank warns of more extreme scenarios: “Europe may sell off (liquidate) some of its record-high holdings of U.S. assets for deterrence purposes.”

On the other hand, the UK seems more inclined toward diplomatic resolution rather than retaliation. British Culture Secretary Nandy emphasized diplomatic contacts with President Trump in an interview, hinting at adopting the same cautious approach as during last year’s trade negotiations.