President Donald Trump’s renewed push to acquire Greenland is now framed not as a novelty or negotiating stunt, but as a foreign policy and national security imperative. Administration officials argue that Greenland’s Arctic location, proximity to emerging shipping lanes, and potential role in countering Russian and Chinese influence make US control strategically essential.
That framing has now been paired with explicit economic pressure: in a recent social media post on Saturday, January 17, 2026, Mr. Trump announced that Denmark — the sovereign power over Greenland — will face a 10 percent tariff on all goods exported to the United States beginning February 1, with the rate rising to 25 percent on June 1 if Denmark does not agree to a “Complete and Total purchase of Greenland.” He further stated that Norway, Sweden, France, Germany, Britain, the Netherlands, and Finland — NATO allies that have expressed solidarity with Denmark — will be subjected to the same escalating tariffs unless they relent.
Even granting the strategic premise, the proposal collapses under basic economic reasoning. The problem is not subtle. It lies in valuation, incentives, and the institutional foundations that make both markets and geopolitics workable.
Valuation, Optionality, and Contradictions
Supporters of the acquisition often cite estimates suggesting Greenland holds between roughly $2 trillion and $4 trillion i n natural resources, including rare earth elements, hydrocarbons, and other critical minerals. At the same time, media reports and policy commentary have floated a hypothetical purchase price in the range of approximately $500 billion to $800 billion. Taken together, these two claims reveal a glaring contradiction.
Natural resources are not cash balances. They represent long-dated option value: future streams of potential revenue that may or may not be realized depending on extraction costs, infrastructure investment, environmental constraints, political consent, and commodity prices. From an asset-pricing perspective, the relevant concept is net present value (NPV). Even after aggressive discounting for uncertainty, time, and development costs, the expected present value of trillions of dollars in underlying resources would still far exceed a one-time payment at a steep discount.
Put differently, if Greenland truly contains assets worth multiple trillions of dollars, then even a willing seller would have no rational incentive to part with it for $500 to 800 billion. Strategic assets with long horizons and geopolitical relevance command premiums, not bargain prices. The administration’s argument defeats itself: the more economically valuable Greenland is claimed to be, the less plausible a discounted sale becomes. If Greenland were a firm, no board would approve selling the entire enterprise for a fraction of its discounted asset value simply because a buyer found it strategically useful. Sovereign assets follow precisely the same logic.
The Symmetry Test
Even setting aside valuation, the Greenland proposal fails a more basic test: symmetry. If historical ties, strategic relevance, and latent economic value were sufficient grounds for territorial acquisition, then several European powers could assert claims to US territory with equal legitimacy.
Spain governed Florida, Texas, and much of the American Southwest for centuries. France once controlled the Louisiana territory, sold under geopolitical pressure in 1803, which now represents tens of trillions of dollars in economic value. Britain administered the original colonies and left behind enduring legal and institutional frameworks. Russia sold Alaska in 1867 for a sum that dramatically undervalued its eventual strategic and resource significance, particularly in today’s Arctic context.
Yet no serious policymaker treats these historical facts as grounds for modern claims. The reason is economic as much as legal. Once sovereignty becomes contingent on strategic usefulness or newly discovered resource value, borders lose durability. Risk premia rise. Long-term investment becomes fragile everywhere. The modern economic order depends on the expectation that territorial arrangements are not perpetually renegotiable under pressure.
Tariffs as Coercion: A Misuse of Trade Policy
The Trump administration’s sharp turn back toward mercantilism was initially justified as a necessary response to claims that the United States had been systematically mistreated by trading partners, hollowed out by unfair competition, and weakened by chronic trade imbalances. That same framework now appears to license something more troubling: the use of economic pressure as a form of geopolitical arm-twisting — leaving governments around the world to wonder what assertions Washington might make next — while the balance of trade and the cost of living for American households hang in the balance.
As mentioned, the Trump administration has floated tariffs against Denmark and other European Union governments if they refuse to cooperate. This reflects a persistent misunderstanding of trade economics. Tariffs are not fines paid by foreign governments; they are taxes borne largely by domestic consumers and firms. Using tariffs as leverage in a territorial dispute would raise costs for US businesses, invite retaliation, and disrupt transatlantic supply chains.
Denmark is neither an isolated counterparty nor a lonely national pariah, and any punitive action would almost certainly provoke coordinated EU responses. From a strategic standpoint, this is self-defeating. If the goal is to strengthen US geopolitical positioning in the Arctic, alienating allies through trade coercion weakens, rather than enhances, that stance. Economically, it introduces uncertainty (not, unfortunately, an unfamiliar consequence of this administration’s policies), raises the cost of capital, and undermines trade relationships the United States itself depends on.
The Cost of Norm Erosion
The administration’s most serious defense of the Greenland gambit is national security. But even here, the logic is mislaid, with severe economic consequences.
Modern economies rely on stable borders and predictable sovereignty. Foreign direct investment, infrastructure finance, and long-term capital allocation all assume that territory is not subject to purchase or coercive transfer. When a major power signals otherwise, perceived geopolitical risk rises, particularly for smaller states. That risk translates directly into higher borrowing costs, reduced investment, and slower growth. Ironically, the erosion of these norms weakens the very strategic environment the policy claims to protect. And international moves one may have never expected to see are materializing with rapidity.
People Are Not Balance-Sheet Items
Finally, Greenland is not some unoccupied resource cache. It is home to a population with political institutions, cultural identity, and stated preferences. Treating territory as a tradable asset abstracts away governance and consent, precisely the factors that determine whether resource wealth becomes long-run prosperity or stagnation.
Even if one accepts the administration’s claim that Greenland holds genuine strategic importance, the proposed means of acquisition are outside the pale of conduct and economically indefensible. The valuation logic violates basic NPV reasoning, the tariff threats misuse an already tattered US trade policy, and the broader approach undermines the fundamental institutional norms that support economic stability and growth. Economic realism requires coherence, not spectacle. On those grounds, the Greenland push is not a hard-nosed or well-calculated stratagem. Dismissing it as ridiculous is accurate, but not sufficiently analytical: it represents a fundamental, deeply troubling misread of the way in which assets, incentives, and institutions interact and work.
The post The Price of Greenland — and the Cost of Attacking Sovereignty was first published by the American Institute for Economic Research (AIER), and is republished here with permission. Please support their efforts.
