Behind the scenes in Davos

President Trump has pushed the US “gunboat policy” to a new level, threatening an additional 10% tariff on several EU countries unless they accept a deal on Greenland. European leaders have now entered a fresh phase of escalation with Washington.
On the economic side, the first-round hit looks manageable. Goldman Sachs estimates that a 10% duty would lower real GDP by roughly 0.1% to 0.2% across the affected countries via reduced trade. Germany would take the biggest hit: around 0.2% if it is an incremental reciprocal tariff, and up to 0.3% if it is a blanket levy.
But the real risk is not the arithmetic. It is confidence, investment delays, and financial-market spillovers. And it becomes much more serious if Europe retaliates (talk is around €93bn of US goods) or if the EU moves toward its anti-coercion instrument. The problem is political: the EU is unlikely to define a single red line quickly, which increases the probability of prolonged uncertainty. Expect intense discussions in Davos — and more volatility in headlines.