U.S. Commerce Chief Warns EU of 'Full-Scale Tariff War' Over Retaliation: "Q1 Growth Over 5%, Rates Must Be Lowered"

Lutnick Speaks at Davos Forum
On U.S.-EU Greenland Dispute: "It Will End Rationally"
"First-Quarter Growth Rate Could Reach 6% If Rates Are Lowered"

Howard Lutnick, U.S. Secretary of Commerce, has urged the European Union (EU) to refrain from retaliatory measures in response to the U.S. “Greenland tariffs” targeting Europe. He also projected that the U.S. economic growth rate for the first quarter of this year will exceed 5%, emphasizing that a cut in the benchmark interest rate is necessary to support such robust growth.

Howard Lutnick, U.S. Secretary of Commerce. Photo by AFP Yonhap News

On January 20 (local time), at the World Economic Forum (WEF) in Davos, Switzerland, Secretary Lutnick stated that if Europe proceeds with trade retaliation against the United States, “We will return to a tit-for-tat phase of escalating tariffs.”

Previously, President Donald Trump announced that, starting February 1, the U.S. would impose a 10% tariff-and from June 1, a 25% tariff-on eight European countries, including Denmark, that opposed the U.S. annexation of Greenland. In response, the EU has signaled possible countermeasures, even considering the activation of the Anti-Coercion Instrument (ACI), also known as the “trade bazooka,” to respond to third countries that pose economic threats to its member states.

Secretary Lutnick referenced the precedent of the U.S. and EU reaching an agreement after previous trade disputes last year, predicting a similar outcome this time. He said, “If there is turmoil, that may happen, but we know exactly where it will end,” adding, “Ultimately, it will be resolved in a rational manner.”

As the U.S. and EU continue their hardline standoff over Greenland, the Davos Forum, attended by President Trump, appears to offer an opportunity for both sides to explore diplomatic solutions.

Secretary Lutnick also expressed confidence in U.S. economic growth.

He explained, “This quarter, the U.S. gross domestic product (GDP) growth rate will exceed 5%,” adding, “This is about the $30 trillion U.S. economy.”

Like President Trump, he reiterated the need for the Federal Reserve to lower the benchmark interest rate.

Secretary Lutnick stated, “The current interest rate should be much lower, and only then can the economy truly prosper. If rates are lower, we could even see a 6% growth rate. What is holding us back is ourselves.”

This outlook is far more optimistic than the forecast by U.S. Treasury Secretary Scott Bessent, who predicted a real U.S. GDP growth rate of 4-5% this year.