Facing the Future featured two guests this week. Former U.S. Ambassador to Denmark Richard Swett discussed ways in which the U.S. could achieve its economic and security interests in Greenland, a semi-autonomous territory of Denmark, without demanding ownership of the island. Then Alex Durante, senior economist at the Tax Foundation, evaluated the impact of President Trump’s tariff agenda.
President Trump has often expressed a desire to acquire Greenland as part of the United States, both for national security and economic reasons. Recently, he threatened tariffs against eight European allies, including Denmark, as leverage tied to Greenland negotiations. He also implied that military force could be an option if a deal couldn’t be reached. After recent discussions with NATO leaders, however, Trump paused those threats and announced a “framework of a future deal” that would address Greenland and broader Arctic cooperation. No details of this framework were given.
Swett, who served as Ambassador to Denmark from 1998 to 2001, said Trump “realized that he may have gone a little bit too far with Greenland,” and that he has options to achieve his main policy goals without a transfer of sovereignty from Denmark.
“One is the defense contract of 1951 [with Denmark],” Swett said, “which, if you read through all 14 articles of it, essentially says very clearly, the United States can do just about anything that it wants on the island, obviously with the approval of the Greenlanders and Denmark, but they’ve always been cooperative. That will give us a presence to implement the Golden Dome [missile defense system], to bring more personnel, more defensive technologies and bases to the island.”
“The other contract that could be utilized,” he continued, “has to do more with economic development – the rare earth minerals that exist on the island under a mile of ice. That is something that can be developed under the U.S.-Mexico-Canada agreement [USMCA]. They can add Greenland to that, which would obviously include Denmark.”
Despite increased tensions with NATO allies, Swett believes that the alliance retains its core mission. “NATO is a defensive organization,” he said. “It is not trying to take over countries, particularly by military force, much like Russia is doing with Ukraine and could do with other surrounding countries. That’s not NATO, and for Russia to claim that’s what NATO’s intentions are is absolutely false and almost laughable because that’s never been the intention of the NATO establishment.”
Alex Durante joined the show to discuss the Tax Foundation’s new report on the administration’s tariffs. He explained that if maintained over 10 years the tariffs would raise revenues but harm economic growth.
“We estimate that the tariffs would reduce GDP in the long run by about 0.5 percent,” he said. “The impact of that negative economic growth is that also you would have an impact on revenue collection. When you account for these negative economic impacts, that reduces our overall revenue score by about $500 billion over the next 10 years, bringing it down from about $2.1 trillion to about $1.6 trillion.”
He noted, “It is true that tariffs raise revenue. That does reduce the primary [i.e.,non-interest] deficits over the next few years, and that is certainly what the bond markets are paying attention to. But if you look at the overall fiscal picture of the debt-to-GDP ratio, it doesn’t change the trajectory very much at all. The U.S. needs large scale fiscal reforms, including Medicare and Social Security, to really address this issue, as well as higher revenue.”
Moreover, Durante pointed out, “The president has said that the tariffs are going to be not only reducing the deficit, but paying for a whole host of other spending programs, as well as sending large rebates to consumers. Obviously, you can’t simultaneously rebate all this money to consumers and pay for deficit reduction.”
Durante also questioned whether the tariffs make economic sense. “Tariffs are a really inefficient tax,” he observed, “because they levy high rates on a very narrow base and we know that is just not an efficient way to raise revenue. Ideally, you want lower rates on a much broader base where it’s hard to substitute between different kinds of goods. So, in general, I do not think this is a viable strategy for deficit reduction.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
