The Battle for Greenland is Not Over

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Last week, Trump threatened 25% tariffs on European countries if they didn’t let US take over Greenland. He framed it as vital for national security against Chinese and Russian arctic ambitions, reviving a long-standing US interest in the territory.

Markets have grown accustomed to Trump’s false tariff threats. By midweek, he had retracted. After talks with NATO Secretary General Mark Rutte, they had purportedly arrived at a “deal” for Greenland.

So why does Trump want Greenland? Greenland observes a naval choke point in the North Atlantic (between Greenland, Iceland, and UK). This is the gateway for Russian submarines to enter the Atlantic Ocean via the Arctic, and threaten US shipping lanes and the US East Coast.

As the Arctic ice cap melts, new shipping lanes are opening up. Soon, Russia and China will use these routes to expand their trade and naval influence. China can also bypass the choke point by building infrastructure in Greenland (they have already attempted to bid on airports and ports on the island).

While the naval bottleneck explains the Pentagon’s immediate interest, it’s only half the story. The real 'deal' involves a complex subsidy model for rare earth elements, one that weaponizes Greenland’s mineral wealth to permanently decouple the US high-tech supply chain from China.

We’ve published the rest of this analysis, including why the market is dangerously underpricing the risk of renewed escalation, over at MktContext.com.

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