Davos | US Treasury Secretary Scott Bessent on Tuesday said America's relations with Europe remain strong and urged trading partners to “take a deep breath” and let tensions driven by the Trump administration's new tariff threats over Greenland “play out.” “I think our relations have never been closer,” he said, speaking on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland.

On Saturday, Trump announced a 10 per cent import tax starting in February on goods from eight European nations that have rallied around Denmark in the wake of his stepped up calls for the United States to take over the semi-autonomous territory of Greenland.

Trump has insisted the US needs the territory for security reasons against possible threats from China and Russia.

The American leader's threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union's anti-coercion instrument.

The EU has three major economic tools it could use to pressure Washington: new tariffs, suspension of the US-EU trade deal, and a “trade bazooka,” the unofficial term for the bloc's Anti-Coercion Instrument that could sanction individuals or institutions found to be putting undue pressure on the EU.