- Trump threatened new U.S. tariffs on eight European countries unless they accept U.S. demands tied to acquiring Greenland.
- Denmark, the targeted nations, and the EU rejected the pressure and prepared countermeasures, including potential retaliatory tariffs and use of anti-coercion tools.
- Global markets sold off on renewed trade-war fears, with stocks falling, Treasury yields rising, the dollar weakening, and gold and silver jumping.
- The standoff risks longer-term damage to U.S.-Europe relations, legal fights over tariff authority, and shifts in capital flows given Europe’s large U.S. asset holdings.
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The current crisis stems from President Trump’s renewed demand that Denmark and several European NATO allies support the U.S. “purchase” or acquisition of Greenland. In retaliation for their refusal, on January 17, 2026, he announced planned tariffs: 10% starting February 1, to climb to 25% on June 1, on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland unless a deal is secured.
Allied responses have been unusually unified and stern. The eight countries issued a joint statement defending their sovereignty and rejecting U.S. coercion, calling the tariff threats “blackmail” that risk a “dangerous downward spiral” in transatlantic relations. The EU is considering activating its anti-coercion tool and preparing a retaliation package worth approximately €93 billion in U.S. goods.
Financial markets have responded sharply. The S&P 500, Dow, and Nasdaq all dropped over 1%; sectors reliant on luxury goods, autos, and international trade were hardest hit. Yields on U.S. Treasury securities rose, the U.S. dollar fell, and traditional safe-haven assets like gold and silver surged to multi-year highs. Volatility spiked.
Strategically, the episode highlights stressed U.S.-ally relations, particularly NATO cohesion, where allies feel security and defense spending aren’t sufficient buffers against economic coercion. The crisis challenges legal norms—tariffs leveraged over sovereignty are seen as potentially infringing international law and trade agreements. The executive branch’s power to impose broad tariffs is under legal review.
Open questions include: Whether the U.S. can legally sustain the threat given pending judicial review; how the EU will retaliate in practice; whether capital markets will shift long term given Europe’s heavy holdings of U.S. assets (including ~$8 trillion in bonds and equities); and, whether Greenland’s own population or Denmark will shift policy under prolonged pressure. Also, implications for Arctic security, resource access (especially critical minerals), and broader balance with China and Russia in the region remain to be seen.
Supporting Notes
- Trump announced that Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland will be charged a 10% tariff starting February 1, rising to 25% on June 1 unless a deal is made for the “Complete and Total purchase of Greenland.”
- EU leaders plan retaliatory tariffs on ~€93 billion of U.S. goods as part of their response.
- The targeted eight European countries issued a joint statement expressing solidarity with Denmark and Greenland, rejecting threats and preserving sovereignty.
- French President Emmanuel Macron labelled the U.S. threats unacceptable and warned that “no intimidation or threat will influence us.”
- U.S. stocks (S&P 500, Dow, Nasdaq) dropped by over 1%, yields on U.S. Treasuries rose, the U.S. dollar weakened, while gold and silver climbed to record or multi-year highs.
- European market indices such as the Stoxx Europe 600, DAX, FTSE 100, CAC 40 declined sharply, with luxury goods and automakers among the hardest hit sectors.
- UK Prime Minister Keir Starmer said applying tariffs against allies is “completely wrong,” emphasizing sovereignty.
- A joint statement by the affected European nations warned the tariff threats undermine transatlantic relations and risk a “dangerous downward spiral.”
- Trump’s tariff threats are being legally challenged; concerns have arisen over the use of the International Emergency Economic Powers Act (IEEPA) to justify sweeping import duties.
- European holdings of U.S. bonds and equities amount to approximately $8 trillion, raising the stakes of capital actions by foreign investors.