EU leaders will rethink their ties with the US at an emergency summit on Thursday after Donald Trump's threat of tariffs and even military action to acquire Greenland badly shook confidence in the transatlantic relationship, diplomats said.

Trump abruptly stepped back on Wednesday from his threat of tariffs on eight European nations, ruled out using force to take Greenland, a semi-autonomous territory of NATO ally Denmark, and suggested a deal was in sight to end the dispute.

German Chancellor Friedrich Merz, welcoming Trump's U-turn on Greenland, urged Europeans not to be too quick to write off the transatlantic partnership.

But EU governments remain wary of another change of mind by a mercurial president who is increasingly seen as a bully that Europe will have to stand up to, and they are focused on coming up with a longer-term plan on how to deal with the United States under this administration and possibly its successors too.

"Trump crossed the Rubicon. He might do it again. There is no going back to what it was. And leaders will discuss it," one EU diplomat said, adding that the bloc needed to move away from its heavy reliance on the US in many areas.

"We need to try to keep him (Trump) close while working on becoming more independent from the US It is a process, probably a long one," the diplomat said.

EU reliance on US

After decades of relying on the United States for defence within the NATO alliance, the EU lacks the needed intelligence, transport, missile defence and production capabilities to defend itself against a possible Russian attack. This gives the US substantial leverage.

The US is also Europe's biggest trading partner, making the EU vulnerable to Trump's policies of imposing tariffs to reduce Washington's trade deficit in goods, and, as in the case of Greenland, to achieve other goals.

"We need to discuss where the red lines are, how we deal with this bully across the Atlantic, where our strengths are," a second EU diplomat said.

"Trump says no tariffs today, but does that mean also no tariffs tomorrow, or will he again quickly change his mind? We need to discuss what to do then," the second diplomat said.

The EU had been considering a package of retaliatory tariffs on 93 billion euros ($108.74 billion) on US imports or anti-coercive measures if Trump had gone ahead with his own tariffs, while knowing such a step would harm Europe's economy as well as the United States.

What's Greenland deal?

Several diplomats noted there were still few details of the new plan for Greenland, agreed between Trump and NATO Secretary General Mark Rutte late on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland.

"Nothing much changed. We still need to see details of the Greenland deal. We are a bit fed up with all the bullying. And we need to act on a few things: more resiliency, unity, get our things together on internal market, competitiveness. And no more accepting tariff bullying," a third diplomat said.

Rutte told Reuters in an interview in Davos on Thursday that under the framework deal he reached with Trump the Western allies would have to step up their presence in the Arctic.

He also said talks would continue between Denmark, Greenland and the US on specific issues.

Diplomats stressed that, although Thursday's emergency EU talks in Brussels would now lose some of their urgency, the longer-term issue of how to handle the relationship with the US remained.

"The approach of a united front in solidarity with Denmark and Greenland while focusing on de-escalation and finding an off-ramp has worked," a fourth EU diplomat said.

"At the same time it would be good to reflect on the state of the relationship and how we want to shape this going forward, given the experiences of the past week (and year)," he said.