(Not So) Fun Fact: The Supreme Court has once again delayed a final ruling on the legality of President Trump’s International Emergency Economic Powers Act (IEEPA) tariffs, meaning the next decision date could be a month away.

A Tariff Shootout Over Greenland

What’s Happening: Over the weekend, President Trump issued yet another tariff threat, this time on countries that do not support the United States acquiring Greenland from Denmark. This new 10-percent tariff, which takes effect on February 1, will impact Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland – all of which sent soldiers to the island in response to U.S. threats. This comes about one week after the president threatened a 25-percent tariff on countries that trade with Iran, an announcement with no formal White House documentation or start date. The European Union (EU) responded to Trump’s tariff threat with a retaliatory tariff package, with officials stating they could use the EU’s Anti-Coercion Instrument. This would allow the EU to impose export controls and restrict U.S. companies’ market access, alongside a host of other protectionist measures. After meeting with the Secretary General of NATO, President Trump stated that the Greenland-related tariffs would no longer go into effect due to a “framework of a future deal” being reached.

Why It Matters: Although the threatened tariff has been canceled (for now), let’s look at what could have happened. The United States imported roughly $363 billion from the targeted countries in 2024 and an estimated $364 billion in 2025. Based on these figures, a 10-percent tariff could raise U.S. consumer and business costs by roughly $20 billion on an annual basis. President Trump stated that the tariff would increase to 25 percent on June 1, meaning this tariff proposal could raise approximately $34 billion in 2026 assuming nothing changes. The retaliatory tariffs from the EU were expected to hit just under $110 billion worth of U.S. exports, with rates ranging from 25 percent on U.S. automobiles to 30 percent on U.S. whiskey products. The EU parliament has also suspended any engagement regarding the U.S.-EU trade deal agreed to last year, meaning trade tensions could continue to escalate. All told, Oxford Economics predicts that a renewed trade war between the United States and EU could lower gross domestic product for both by 1 percent, as well as have substantial negative global growth effects.

President Trump continues to emphasize the strategic importance of Greenland and has repeatedly pointed out the value of the island’s critical mineral resources. In fact, Greenland’s location is important for U.S. national security due to its proximity to Russia and position next to increasingly important Arctic trade routes. Additionally, Greenland holds close to $200 billion worth of accessible mineral resources and $2.7 trillion worth of mineral reserves, as previous American Action Forum (AAF) research highlighted. The question, however, is not whether Greenland is of interest to the United States. Instead, it is whether U.S. consumers should pay tens of billions of dollars annually while U.S. companies get boxed out of foreign markets in the hopes Europe makes some sort of deal. These tariff threats are not easily brushed off by our allies either, as countries such as Canada and France look to replace U.S. economic influence with China.

Looking Ahead: It appears that calmer heads have prevailed in the end. During President Trump’s speech at the World Economic Forum, he reassured the world that he will not use military force to seize Greenland. Later in the day he backtracked on starting a trade war with Europe. While this is good news for the short term, it will remain unclear for the foreseeable future what a Greenland deal looks like in practice and whether European countries are actually aligned with what the president wants. This tariff threat could very easily resurface down the line, just as the Iran tariff threat is still in play.

The Semiconductor Tariff That Fizzled Out

What’s Happening: Last week, President Trump signed an executive order implementing a 25-percent tariff on semiconductor imports with the stated purpose of ensuring national security and promoting domestic supply chains. This tariff was imposed via Section 232 of the Trade Expansion Act of 1962, a separate presidential trade authority than IEEPA – the legality of which is currently being determined by the Supreme Court. This tariff should come as no surprise as President Trump has repeatedly threatened a tariff on semiconductors since early last year, with a formal Section 232 investigation beginning on April 1, 2025.

Why It Matters: At face value, this tariff impacts roughly $240 billion in U.S. imports and raises costs by nearly $31 billion on an annual basis. Yet this estimate fails to consider the numerous exemptions that are mentioned within the executive order, as well as the various trade deals that cap the tariff rate at 15 percent. There is also the recently announced deal with Taiwan that puts in place a tariff-rate quota system with tariff-free entry for a certain number of semiconductors, as well as preferential tariff rates once the quota is reached. Additionally, imports that are compliant with the United States-Mexico-Canada Agreement (USMCA) enter tariff-free, representing 80–90 percent of imports from Mexico and Canada. In a high-exemption scenario, the actual cost of this semiconductor tariff falls drastically to $4 billion annually, meaning much of the potency of this tariff is in name only. For more information on this tariff, look at recently published AAF research.

Looking Ahead: The fact that this tariff has been effectively hollowed out through exemptions is welcome news for future Section 232 tariffs and may indicate that a future pharmaceutical tariff may be less drastic. Section 232 tariffs are expected to become a mainstay of the Trump Administration’s tariff policy if the Supreme Court strikes down IEEPA tariffs. Currently, there are eight pending Section 232 investigations that are likely to be imposed at some point later this year (see chart below), some of which have trade deal tariff caps and pre-determined exemptions similar to the semiconductor tariff.

Implemented and Ongoing Section 232 Investigations: