ANALYSIS: When tariffs become geopolitical weapons

A few weeks ago, US President Donald Trump threatened to acquire Greenland, a semi-autonomous island under Denmark.

He did not rule out the use of force. Members of the North Atlantic Treaty Organization (NATO) were sent reeling at the possibility of NATO countries, of which Denmark is one,  fighting another NATO country.

 As NATO allies showed their support for Greenland and Denmark, Trump threatened to impose increasing tariffs on Denmark and these seven NATO countries.

As it turns out, these threats backfired badly, both economically and politically, sending stock markets worldwide spiralling, and leaving a crack in the NATO alliance.  

Trump, amidst international backlash, backed down, agreeing instead to work out a framework with Denmark and NATO through negotiation.

Every now and then, international politics creates a situation that looks straight out of a political satire novel.

Even though Trump's ploy of using tariffs to force countries into accepting a territorial claim was unsuccessful, it seemed possible for a while. It showed us how powerful countries might use economic pressure to get what they want.

In such a situation, where do alliances fit in? How does trade get weaponized? And what would be the long-term consequences if territorial politics and trade wars start mixing more openly?

Greenland

Weaponizing tariffs

Traditionally, if one country wanted something from another, it used diplomacy, negotiation, treaties, or, in uglier times, military action.

In the 21st century, however, economics has become a major tool of influence. Countries have started using sanctions, tariffs, and access to markets as leverage.

Before Trump, the United States was generally viewed as a beacon of world order, a defender of the rules of law. Realizing America has all the trade cards in the world, Trump started to use tariffs on countries in a different level and for different reasons.

Tariffs were used to push his geopolitical objectives like annexing Canada and acquiring Greenland.  In such scenarios, tariffs would no longer be about protecting domestic industries or getting trade concessions. Tariffs instead have become tools to influence political and territorial decisions.

On paper, tariffs sounds like a clever workaround to avoid war or military and economic coercion. But in practice, tariffs would likely lead to confusion, trade retaliation, damaged relationships, and even war.

The dynamics of alliances: no permanent friends or enemies

Alliances, like NATO, rely on trust, cooperation, and mutual-defense commitments. They are neither transactional like business deals, nor do they operate well under threats.

Canada was one of America’s closest neighbor and long-time ally, until it was not, just because it refused to become America’s 51^st state.

Denmark and NATO have been at the forefront of America’s fight against terrorism in Europe, until Trump threatened them with force for not agreeing to sell Greenland.

Using tariffs as leverage against allies would be like forcing your best friend into selling you his or her car-- with the threat of you closing off their road right of way if your friend refused.  Technically, it might work, but the friendship won’t be the same afterwards.

One key feature of alliances is the comfort of disagreeing without consequences. The moment disagreements become punishable, the alliance stops feeling like a partnership and it starts feeling more like bullying.

Using tariffs recklessly creates ripple effects throughout the economy. The first ripple would be retaliation.

If Europe faced tariffs over a territorial issue involving Greenland, Europe would likely impose counter-tariffs, which would hit American exporters and consumers.

The European Union could wage their own trade wars against America.  But, trade wars rarely stay neat and confined to the original issue that caused them. Like a disease, they spread, and their impacts are long-lasting.

Canada pushed back and imposed its own brand of trade retaliation against America. It also forced Prime Minister Mark Carney to look further and deepen trade ties with Europe and Asia, and seek new trade deals with America’s largest rival, China.

Europe is also considering increased trade ties with China, India and Asia, bypassing America. The very things that Trump did not want to happen – a weakened America-  are slowly but surely happening.

The second ripple effect would be “uncertainty.” Businesses make investments based on stability. If tariffs would suddenly appear over political disputes, companies would have to factor political risks into their planning.--making investments more expensive and growth go slower.

This is why the US dollar and stock markets worldwide plummeted the moment Trump announced tariffs over the dispute on Greenland,  and recovered somewhat when he backed down on his threats.

In theory, a world where territorial disputes are tied to trade conflicts could easily spiral into a world where everything becomes negotiable and where nothing feels secure anymore.

Territory isn’t just land, it has people

Another theoretical complication is the human factor. Greenland has its own parliament, culture, and growing political identity. The idea of buying territory today is very different from the 1800s, when the U.S. purchased Alaska from Russia.

Modern international norms emphasize self-determination—meaning, people, not governments, have a say in where they belong. Greenlanders insist their territory is not for sale. Canadians, though long associated with the US, do not want to be citizens of the USA.

From a theoretical point of view, territorial negotiation that is tariff-driven would be awkward because it treats land as an asset without recognizing the people living on it, their wishes, and their desires.

This makes the scenario not just a trade conflict nor just a geopolitical chess move—it becomes a democratic and cultural question, too.

The Long view: changing the rules of global politics

The most significant aspect of using tariffs as a weapon is thinking about the long-term rules of the game. Right now, the international system, for all its flaws, is based on treaties, institutions, and norms. If tariffs will be used to settle territorial matters, it could change the rules of global politics.

Other powers might copy the tactic. China has used economic pressure against Australia, South Korea, and Lithuania in the past. Russia has used gas exports as leverage in Europe.

Seeing the US normalize such tactics might make these acceptable to powerful countries, making “economic coercion” a standard geopolitical tool.

In that kind of world, the cost of disagreement rises, alliances feel less secure, and smaller, weaker countries become more vulnerable.

The Greenland and Canada examples may make us smirk, but they illustrate an important geopolitical truth: mixing territorial ambitions with trade coercion would fundamentally change how countries interact.

It would strain alliances, disrupt economies, empower rival powers, and weaken the trust that has kept global politics relatively stable.

Territory in the 21st century is not bought with money and, certainly, nor acquired by bullying through tariffs.

It is shaped by identity, diplomacy, and norms. Once those rules change, the consequences don’t go away quickly. They oftentimes leave hard and lasting imprints.