The Price Of Trump's "Greenland New Deal": $100,000 Per Person
By Bas van Geffen, Senior Macro Strategist at Rabobank
President Trump has called for a 50% increase of the US defense budget, to $1.5 trillion by next year. This should suffice to build a “Dream Military.” The president argues this is required to keep the US safe and secure, but will it keep his own political position safe? Trump’s new military focus is creating more friction in Congress, as well as between the US and its allies.
Trump argued that tariff revenues can “easily” pay for a bigger defense budget, but the CBO has estimated that tariff revenues will only generate about half of the president’s planned increase in military expenditures. And that assumes these revenues will keep flowing. Trump could face a setback on that front as early as today (see below).
Even if tariff revenues keep coming in, Trump’s plans could renew concerns about the sustainability of the US’ finances. Cuts in other parts of government might be an option on paper, but Trump does need congressional support for this. And the House of Representatives has just passed legislation on a spending bill that waters down many of Trump’s budget cuts – including restoring Obamacare subsidies for three years – as lawmakers seek to avoid another shutdown by the end of the month.
In international political circles, there is less alarm about the US’ fiscal prudence than there are concerns about what the president may want to use such an expanded military apparatus for. Despite his platform of noninterventionism, Trump has already been more active on the world stage than during his first term.
Yesterday, the US president suggested that military operations in Venezuela – or the wider region? – are not over after the quick capture of President Maduro last weekend: “we’ve knocked out 97% of the drugs coming in by water, and we are going to start now hitting the land.”
Congress is pushing back against further strikes. Five Republican senators joined with the Democrats to advance a bill that would limit Trump’s ability to take further military action in Venezuela without congressional approval.
However, for the war powers resolution to have any effect, it must first pass a final vote in Senate and it must then still pass the House – and with support from more than a handful of Republicans: President Trump could veto the bill unless it gets a two-thirds majority in both houses of Congress. More importantly, the bill focuses on military operations in Venezuela.
That still leaves countries like Mexico, which “is being run by cartels” according to Trump, or Colombia at risk. Several senators have said they plan to introduce similar resolutions for other countries (e.g., Greenland, Colombia, Cuba, Mexico, and Nigeria). However, these have not been included in the current resolution due to Senate rules requiring country-specific legislation.
And then there is the Arctic. At the start of this week, Trump reiterated his plans to acquire Greenland, and he has since not let go of the idea. The US president may prefer to buy the country. According to Reuters’ sources, US officials have discussed lump sum payments of $10,000 to $100,000 per Greenlander in order to convince them to become part of the United States. However, that’s just one plan, and Trump has not ruled out military means to get what he wants.
"with a population of only around 50,000, one might imagine a thought experiment where, for the low, low price of $50 billion, Trump offers every Greenlander $1 million in exchange for their country. That might prove more attractive." - Rabobank
— zerohedge (@zerohedge) January 6, 2026
European deterrence is limited. In fact, the EU must be careful not to alienate the country that they still need to safeguard their own security. Zelenskyy had just claimed an agreement on security guarantees, which was ready for finalization with the US president, but Russia has already rejected a European peacekeeping force in the country –a key part of the proposal– as an immediate threat to Russian security.
So, the EU may still try to change Trump’s mind through diplomacy. Denmark has already agreed to give the US military extensive access to Greenland. Perhaps a buildup of EU military presence in the Arctic could reassure the US that Europe can help to keep the region safe. But that would be another drain on the EU’s limited resources, and it remains to be seen whether this is enough to convince the US president. Canada will probably be watching this space anxiously too.