US Treasury Secretary Scott Bessent expressed confidence on Tuesday that the United States and European countries would find a solution over the US administration’s aim to take over Greenland, brushing off “hysteria” about a possible trade war.

US President Donald Trump announced tariffs on Saturday on imports from European allies that oppose the United States taking over Greenland, an autonomous part of Denmark.

European countries say new tariffs would violate a trade deal reached with Trump last year, and EU leaders are set to discuss possible retaliation at an emergency summit in Brussels on Thursday.

One option is a package of tariffs on 93 billion euros ($108 billion) of US imports that could automatically kick in on February 6 after a six-month suspension.

Bessent said the issue had only recently emerged and a solution would be found that ensures national security for the United States and Europe.

“It’s been 48 hours. As I said, sit back, relax,” Bessent told reporters on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland.

“I am confident that the leaders will not escalate and that this will work out in a manner that ends up in a very good place for all.”

Asked about the prospect of a prolonged trade war between the United States and Europe, Bessent replied: “Why are we jumping there? Why are you taking it to the worst case?… Calm down the hysteria. Take a deep breath.”

Trump has repeatedly insisted he will settle for nothing less than ownership of Greenland. Leaders of both Denmark and Greenland have said the island is not for sale and does not want to be part of the United States.

Bessent dismissed the possibility that the EU would for the first time tap its Anti-Coercion Instrument, a powerful trade measure which could limit US access to public tenders, investments or banking activity, or restrict trade in services.

“Well, having worked with the Europeans, my guess is their next move will be to form a working group, the dreaded ‘European working group’,” Bessent said in an interview with CNBC.

“We’ve seen a lot of working groups.”

In his earlier briefing, Bessent also dismissed market speculation that European governments might sell US Treasury bonds they own as reserves, making it more expensive for the US government to finance itself.

“(US government debt) is the most liquid market, it is the basis for all financial transactions and I am sure that the European governments will continue holding it,” Bessent said.