US tariffs imposed on European countries could create a “spiral of events” that have a potentially “enormous” impact on economies and markets, Ireland’s deputy premier has said.

Simon Harris said it was difficult to model the potential impact of such tariffs, imposed by the US over European opposition to the threat to annex Greenland, as it could be part of a fundamental change of the transatlantic relationship.

Donald Trump has threatened a 10% tariff on eight European allies, including the UK, from February 1 unless they agree to his purchase of Greenland.

During a speech to world leaders at Davos on Wednesday, Mr Trump called for immediate negotiations to acquire the Arctic territory while ruling out using force.

Ireland, although not among the eight countries threatened, has said tariffs on some member states amounted to tariffs on all member states.

Mr Harris, who is Ireland’s deputy premier and finance minister, said that while there is a lot of “noise and threats” about Greenland, “nothing has factually changed”.

“We have a period of time from now until February 1 to negotiate,” he said at Government Buildings in Dublin.

He said the EU would be “failing in our duty and our job” if they did not try to use diplomacy to find a solution, but added if the US were to impose tariffs, the EU would “respond without delay and in a united fashion”.

He said that if the US were to annex Greenland that would “fundamentally alter the transatlantic relationship” and said that that in turn could create a “spiral of events and retaliatory events” across economies and markets.

He said as a result, it was “not an exact science” to model the potential impacts on Ireland.

“You can run a model that if there’s a 15% tariff applied on a country – and we did this before and published it – that would have an effect on what we call ‘modify domestic demand’, effectively growth, by 1.4% to 1.5% annually over a medium term, that it would result in roughly around 60,000 fewer jobs being created if there were tariffs.

“But what those models can’t capture is what happens if the transatlantic relationship, as we know it, doesn’t exist into the future.

“I do want to caveat this, because it is a time for cool heads.

“All we have at the moment is noise, statements, threats, vulgarity in terms of some public commentary, so nothing has factually changed.”

He said Mr Trump “doesn’t have all the cards” on this issue, adding he had met with major multinational companies in the US last week that want to continue trade with Europe.

Mr Harris said that the EU was “taken aback” by the threat of tariffs, particularly after an EU-US trade deal was struck last year.

“When you work so intensively and when those interpersonal relationships develop, and then you find before the agreement is even through the European Parliament, you’re learning on Truth Social and elsewhere that he’s changed his mind.

“But I do think there’s a way to go on this, I think there’s quite a number of twists and turns, and I think the intelligent and responsible thing to do is, step by step, and also not just respond to all the noise in the days ahead, but prepare.”

He added: “Our priority right now is on working to make sure that actually the end position turns out to be very different to the Truth Social posts.”