Trump sacrifices European buffer vs. Russia to pursue Manifest Delusions

(Originally published Jan. 20 in “What in the World“) Investors now see a risk that Europe may face a two-front war against Russia and the United States.

European defense stocks, as measured by the Stoxx Europe Aerospace and Defence index, have climbed 15% this month, led by Sweden’s Saab, which has soared 32%. The index has more than tripled since Russia’s 2022 invasion of Ukraine and as the European members of the North Atlantic Treaty Organization agreed to double their defense budgets under pressure from Trump, to 5% of GDP. But Trump’s emerging threat to use military force to annex Greenland from fellow NATO-member Denmark has given new power to the sector’s rally. Other stocks leading the rise are Germany’s Rheinmetall and Britain’s BAE Systems, both of which have climbed 22% since the start of the year.

Trump has rationalized his desire for Greenland by saying the U.S. needs to secure it against China and Russia. “The World is not secure unless we have Complete and Total Control of Greenland. Thank you!” he texted on Sunday to Norwegian Prime Minister Jonas Gahr Store. The same day, U.S. Treasury Secretary Scott Bessent echoed Trump’s sentiment, explaining that the U.S. needs to take over Greenland because “Europeans project weakness.”

Yet a 1951 agreement with Denmark gives U.S. almost carte blanche to expand its existing military bases in Greenland if it deems doing so necessary. Europe’s leaders have figured out that Trump’s lust for Greenland has nothing to do with defending NATO, or the U.S. No, Trump covets the island’s rapidly thawing resources and simply wants to acquire its landmass, thus adding his name to the very short list of U.S. Presidents that have expanded the United States’ imperial domain. For those keeping score, that’s:

• Thomas Jefferson (paid France $15 million for what is now not just Louisiana, but also Arkansas, Iowa, Kansas, Missouri, and Nebraska, as well as parts of Colorado, Minnesota, New Mexico, Montana, North Dakota, South Dakota, Texas, and Wyoming);
• James K. Polk (annexed the rest of Texas, seized Arizona, California, the rest of New Mexico, Nevada, and Utah from Mexico, and negotiated with Britain to add what is now Oregon);
• Andrew Johnson (paid Russia $7.2 million for Alaska);
• William McKinley (annexed the Kingdom of Hawaii and seized Guam, and the Philippines, and Puerto Rico from Spain—though the U.S. relinquished the Philippines after World War II);
• and Theodore Roosevelt (a man, a plan, a canal, Panama. It’s TR’s big-stick image Trump clearly wants to emulate even as he rolls back “the hero of San Juan’s” Progressive reforms, anti-corruption and trust-busting).

So, after several of those NATO countries sent troops to shore up Greenland’s defenses (Denmark sent even more troops to Greenland Monday), Trump announced new tariffs on countries opposing a U.S. purchase of Greenland. The 10% tariff, presumably on top of the tariffs he has already imposed, will take effect Feb. 1 on goods imported to the U.S. from Denmark, Finland, France, Germany, the Netherlands Norway, Sweden, and the United Kingdom, and rise to 25% on June 1.

While Trump has made clear he wants Denmark to sell Greenland, his refusal to rule out using force to take it is a position that sounds ominously similar to the language China uses about Taiwan, which it regards as a renegade province whose reunification with the mainland is inevitable, if not necessarily imminent. Beijing hasn’t—not publicly at least—offered to purchase Taiwan. But China got the message on the annexation part: on Saturday, it flew a surveillance drone for the first time into Taiwan airspace. China’s WZ-7 “Soaring Dragon” UAV spent just four minutes flying above tiny Dongsha atoll southwest of Taiwan, beyond the range of air defenses.

As for Europe, it now faces the prospect of not only replacing the U.S. security umbrella, but girding itself to face foes both to the east in Moscow, and to the west in Washington, D.C. It won’t want to maintain its reliance on U.S. defense contractors, whose exports must be approved by Congress, to do so. And Trump, to grab a piece of frozen rock, is sacrificing what has since World War II been the most valuable piece on America’s geopolitical chessboard: the human shield that Europe has been between Russia and the United States.