Iran Risk Lifts Oil Prices, But a Supply Glut Looms

A top European Central Bank official has issued a stark warning, stating that policymakers should not be "naive" and must recognize that Europe is already "at war" with Russia. Martins Kazaks, a member of the ECB's Governing Council, urged central banks to prepare for further escalation of the conflict.

In an interview with the Financial Times, Kazaks argued that while the conflict is not "physically on our ground," Europe is actively engaged through other means. He pointed to cyber attacks and the sabotage of undersea cables in the Baltic Sea as clear evidence of this ongoing confrontation, stressing that the continent must "be resilient to deal with that."

Financial Stability and Debt Under Threat

Kazaks outlined the potential economic fallout if a military conflict were to directly involve a euro-area member. Such a scenario could trigger significant "financial stability issues" and raise serious concerns about the sustainability of national debt.

However, he emphasized that these risks are currently "marginal." He also expressed confidence that the European Union has the capacity to address such challenges if they were to arise.

A Strategy to Prevent Direct Conflict

To reduce the risk of a direct military clash, Kazaks proposed a two-part strategy. He advised that Europe should:

1. Support Ukraine to a degree that ensures Moscow "does not win."

2. Bolster its own military forces to create a credible deterrent against further aggression.

Kazaks' Bid for ECB Leadership

These comments come as Kazaks positions himself as a contender to become the next ECB vice president, seeking to replace Luis de Guindos when his term concludes in May.

The selection process involves a decision by euro-area finance ministers, which could be delayed due to an unusually high number of candidates. The chosen nominee will then face a hearing at the European Parliament and be consulted on by the ECB's Governing Council before European Union leaders make the final appointment.

Donald Trump’s threat to levy tariffs on key European allies, including the UK, unless a deal is struck for the US to purchase Greenland has sparked a sharp and unified backlash from his traditional supporters on the British political right.

Leaders from both the Conservative and Reform UK parties have publicly criticized the US president's move, aligning their positions with the UK government led by Prime Minister Keir Starmer.

Conservatives Decry "Outrageous" Tactics

Senior Conservative figures were swift to denounce the tariff threat. Party leader Kemi Badenoch posted on X that it was "completely wrong to announce tariffs on the UK over Greenland," directly echoing the language used by the Prime Minister.

Jeremy Hunt, a former Conservative foreign secretary, offered a blunter assessment, telling the BBC that the threat is "what happens when Donald Trump thinks you are weak." He described the tactic as "an outrageous way to treat a NATO ally." Hunt argued that the only way for the UK to maintain control of its destiny and prevent such actions is to ensure it can defend itself.

Reform UK Criticizes Methods, Not Motives

Criticism also came from Reform UK, a party whose leader, Nigel Farage, is known for his close relationship with Trump.

Richard Tice, Reform UK's Deputy Leader, told the BBC that Trump "has got it wrong." While Tice agreed with the underlying objective of securing Greenland for NATO allies, he stated, "the way that he's going about it is totally wrong." He called on Prime Minister Starmer to open negotiations with the United States.

Zia Yusuf, Reform's head of policy, voiced economic concerns in an interview with ITV. "Bigger tariffs on this country will make it even harder for British manufacturers, even harder for British workers," Yusuf said, adding he was "very concerned" about the potential impact.

When asked if Farage should leverage his relationship with Trump to advocate for the UK, Yusuf noted that while he was sure Farage would do so if requested by the government, the responsibility lies elsewhere. "It's not his place to do that. It's up to the prime minister to make that call," Yusuf said.

The Tariff Ultimatum Explained

On Saturday, Trump announced a plan to impose a 10% tariff on eight European nations, including the UK and Denmark, starting February 1. The rate is set to increase to 25% in June.

The move is a response to the nations' plans to conduct NATO military exercises in Greenland, which Trump views as a token gesture. He has publicly stated that bringing Greenland under US control is essential to Western national security, citing perceived threats to the island from Russia and China.

Prime Minister Starmer addressed the issue on Saturday, stating that Greenland's future "is a matter for the Greenlanders and the Danes." He affirmed the UK's position, saying, "Applying tariffs on allies for pursuing the collective security of NATO allies is completely wrong. We will of course be pursuing this directly with the US administration."

Italian Prime Minister Giorgia Meloni has labeled U.S. President Donald Trump's threat to impose tariffs over his Greenland plan a "mistake," confirming she has personally communicated her concerns to him.

Speaking to journalists during a visit to Seoul on Sunday, Meloni stated, "I believe that imposing new sanctions today would be a mistake." She added, "I spoke to Donald Trump a few hours ago and told him what I think."

Italian Prime Minister Giorgia Meloni addresses the press in Seoul, where she detailed her opposition to potential U.S. tariffs over the Greenland issue.

Framing the Dispute as Miscommunication

Despite her direct opposition to the tariffs, the far-right prime minister, who is considered a Trump ally in Europe, attempted to de-escalate the conflict. She suggested to reporters that "there has been a problem of understanding and communication" between the United States and Europe regarding the autonomous Danish territory.

Meloni noted that from the American perspective, the signals coming from Europe were unclear. "It seems to me that the risk is that the initiatives of some European countries were interpreted as anti-American, which was clearly not the intention," she explained, without specifying which initiatives she was referring to.

A Call for NATO Intervention

Meloni argued that NATO is the appropriate venue for resolving the growing crisis. She reported speaking with the NATO secretary general, who confirmed the alliance is beginning to work on the matter.

"NATO is the place where we must try to organise together deterrents against interference that may be hostile in a territory that is clearly strategic," she said. "I believe that the fact that NATO has begun to work on this is a good initiative."

Trump's Tariff Threats Explained

The dispute centers on Trump's moves related to Greenland, which he claims is essential for U.S. national security. In response to European objections, Trump has threatened to impose tariffs of up to 25% on all goods imported into the U.S. from several key nations:

• Denmark

• Norway

• Sweden

• France

• Germany

• The United Kingdom

• The Netherlands

• Finland

The Netherlands' foreign minister has labeled U.S. President Donald Trump's threat to impose new tariffs on European allies as "blackmail." The move is designed to pressure several nations into facilitating the sale of Greenland to the United States.

Dutch Foreign Minister David van Weel characterized President Trump's tariff threat as a form of blackmail that undermines the NATO alliance.

"It's blackmail what he's doing," Foreign Minister David van Weel said during an interview on Dutch television. "And it's not necessary. It doesn't help the alliance (NATO) and it also doesn't help Greenland."

Trump's Tariff Ultimatum

In a post on Truth Social, President Trump announced that additional 10% import tariffs would take effect on February 1. The tariffs target goods from eight European countries that have committed personnel to a NATO exercise on Greenland:

• Denmark

• Norway

• Sweden

• France

• Germany

• The Netherlands

• Finland

• Great Britain

Strategic Tensions Over Greenland

Van Weel argued that connecting trade policy to the Greenland issue was inappropriate. He explained that the NATO mission was intended to demonstrate Europe's commitment to defending the island, not as a bargaining chip for its sale.

President Trump has insisted on achieving full U.S. ownership of Greenland, which is an autonomous territory of Denmark. He cites the island's strategic location and mineral deposits as vital to American security.

However, leaders in both Denmark and Greenland have firmly stated that the island is not for sale and does not wish to become part of the United States.

European Union Prepares a Response

In response to the escalating trade tensions, ambassadors from the 27 European Union member states are set to convene for an emergency meeting on Sunday. The primary agenda will be to formulate a unified response to Trump's tariff threat.

South Korea's government has announced it will not stand by as the United States imposes a 25% tariff on imported artificial intelligence chips, vowing to negotiate directly with Washington to protect its semiconductor industry.

A presidential spokesperson confirmed on Sunday that Seoul will push for favorable terms to shield its globally significant chipmakers, Samsung Electronics and SK Hynix. While Donald Trump’s new tariff proclamation may not immediately affect these memory chip giants, the South Korean government is taking proactive steps to mitigate any future impact.

Officials reminded reporters of a joint fact sheet published last year, in which the U.S. agreed that South Korea would not receive worse tariff treatment than other chip-producing nations. This agreement is now facing a critical test.

How the Initial Tariffs Target AI Chips

The first wave of tariffs primarily targets high-end AI chips, not the memory chips that form the core of South Korea's semiconductor exports.

Trade Minister Yeo Han-koo stated on Saturday that the initial measures focus on advanced processors made by companies like Nvidia and AMD. "The impact is expected to be limited," he noted, as the memory chips typically exported by South Korea are not included in this phase.

However, Yeo cautioned against complacency. "It is not yet time to be reassured," he said, emphasizing the uncertainty surrounding the future scope of the tariffs. He affirmed that the government would continue collaborating with local companies to secure the best possible outcome.

The Broader 'Build in America' Threat

The new U.S. tariff policy, signed by Trump on Wednesday, is officially justified on national security grounds. It applies a 25% duty on specific AI chips, including Nvidia's H200 and AMD's MI325X.

The White House described the scope as "narrow," listing several exemptions. The tariffs will not apply to chips imported for:

• U.S. data centers

• Public sector applications

• Consumer electronics

• Startups

• Civil industrial uses not involving data centers

Despite these exemptions, the policy signals a clear long-term strategy: pressuring foreign companies to increase domestic production in the United States. The official fact sheet explicitly leaves the door open for wider tariffs on more chip types and related products.

U.S. Commerce Secretary Howard Lutnick delivered a stark warning, suggesting that South Korean and Taiwanese chipmakers that do not invest in American manufacturing could face tariffs as high as 100%. "If you want to sell in America, you should build in America," Lutnick declared at a groundbreaking event for Micron's new plant in New York.

The new rules follow a nine-month investigation conducted under Section 232 of the Trade Expansion Act of 1962, which targeted advanced chips meeting specific performance thresholds.

France is preparing to request that the European Union deploy its most powerful economic defense mechanism after U.S. President Donald Trump announced new tariffs tied to his demand to purchase Greenland.

President Emmanuel Macron, who has already branded the tariff threat "unacceptable," will formally ask the EU to activate its anti-coercion instrument (ACI), according to a person familiar with the decision.

The move comes in response to a U.S. plan to impose a 10% tariff on goods from eight European countries, including France, starting February 1. In a social media post, President Trump threatened to raise the levy to 25% in June unless a "Deal is reached for the Complete and Total purchase of Greenland."

In response to the announcement, EU national ambassadors are set to meet on Sunday to determine the bloc's next steps.

What is the EU's Anti-Coercion Instrument?

The ACI is the European Union's most formidable retaliatory trade tool. While it has never been used, the instrument was designed primarily as a deterrent to counter coercive economic actions from other countries. It specifically targets situations where trade is used to pressure the policy choices of the EU or its member states.

If triggered, the EU could enact a range of countermeasures, including:

• Imposing retaliatory tariffs on U.S. goods.

• Introducing new taxes on tech companies.

• Placing targeted curbs on U.S. investment in the EU.

• Restricting access to certain segments of the EU market.

• Barring firms from bidding for public contracts in Europe.

New Tariffs Threaten Existing EU-US Trade Deal

According to the person familiar with President Macron's thinking, Trump's tariff plan directly challenges the validity of the trade deal reached between the EU and the U.S. last year.

That agreement has been partially implemented but still requires final approval from parliament. With the new tensions over Greenland, that approval process is now likely to be halted.