German Chancellor Friedrich Merz welcomed U.S. President Donald Trump’s vow not to use military force to take Greenland, while warning that Europe must exert its own power as the world becomes a more far more dangerous place.

Calling it “good news” that Trump said he would drop the Feb. 1 tariffs he’d pledged to slap onto European countries over Greenland, Merz nonetheless said Washington was “radically reshaping” its foreign policy, shaking the foundations of the international order.

“This new world of great powers is being built on power, on strength, and when it comes to it, on force,” Merz said Thursday during an address at the World Economic Forum in Davos. “It’s not a cozy place.”

Merz urged European nations to move swiftly to boost their defense spending and economic competitiveness in order to be able to exert power amid the “tectonic” shifts in the global order. At the same time, he urged Germans and other Europeans not to give up on the transatlantic alliance and NATO, advocating, in effect, a middle path.

“Despite all the frustration and anger of recent months, let us not be too quick to write off the transatlantic partnership,” Merz said, switching briefly to German. “We Europeans, we Germans, know how precious the trust on which NATO is based is.”

Merz sounded particularly grave about what he framed as the dire risks of the world entering a new era of great power rivalry.

“The world where only power counts is a dangerous place, first, for small states, then for the middle powers, and ultimately for the great ones,” he said. “I do not say this lightly. In the 20th century, my country Germany went down this road to its bitter end. It pulled the world into a black abyss.”

Mercosur a must for Merz

The German chancellor used his speech to set out a three-pronged plan for Europe to assert itself in the new world order: invest “massively” in defense, make its economies more competitive and stay united.

Merz argued that Europe must secure new trade deals around the world to boost its economic competitiveness, pitting the EU in direct opposition to Trump’s tariff policies.

“Europe’s trade ambitions are crystal clear,” Merz said. “We want to be the alliance offering open markets and trade opportunities.”

Europe, he went on, “must be the antithesis to state sponsored unfair trade practices, raw material protectionism, tech prohibition and arbitrary tariffs. Tariffs again have to be replaced by rules, and those rules need to be respected by trading partners.”

Merz said that  both Germany and Europe have “wasted” opportunities for growth in recent years, including by failing to implement an EU trade deal with the Mercosur bloc of South American countries.

The chancellor sharply criticized the European Parliament’s vote this week to send the accord for a judicial review, a move which could delay the trade deal by up to two years, putting pressure on the European Commission to provisionally apply the agreement.

Merz said there is “no alternative” to the deal.

“We will not be stopped,” he added. “Most likely, this agreement will provisionally be put in place.”