Global markets face renewed volatility after U.S. President Donald Trump vowed to impose tariffs on eight European nations unless Washington is allowed to buy Greenland. Trump said a 10% import duty would take effect from February 1, rising to 25% by June if no deal is reached.
| Photo Credit:
Dado Ruvic/Reuters
Global markets face a fresh
bout of volatility this week after President Donald Trump vowed
to slap tariffs on eight European nations until the U.S. is
allowed to buy Greenland.
Trump said he would impose an additional 10% import tariffs
from February 1 on goods from Denmark, Norway, Sweden, France,
Germany, the Netherlands, Finland and Britain, which will rise
to 25% on June 1 if no deal is reached.
The eight European states issued a joint statement backing
Greenland on Sunday, while Ireland’s prime minister said the
European Union will retaliate if U.S. tariff threats against
Europe materialise.
“Hopes that the tariff situation has calmed down for this
year have been dashed for now – and we find ourselves in the
same situation as last spring,” said Berenberg chief economist
Holger Schmieding.
Sweeping “Liberation Day” tariffs in April 2025 sent
shockwaves through markets. Investors then largely looked past
Trump trade threats in the second half of the year, viewing them
as noise and responding with relief as Trump made deals with
Britain, the EU and others.
While that lull might be over, market moves on Monday could
be dampened by the experience that investor sentiment had been
more resilient and global economic growth stayed on track.
Nonetheless, Schmieding expected the euro could come under
some pressure when Asian trade begins. The euro ended Friday at
around $1.16 against the dollar, having hit its lowest
levels since late November.
Implications for the dollar were less clear. It remains a
safe haven, but could also feel the impact of Washington being
at the centre of geopolitical ruptures, as it did last April.
“For European markets it will be a small setback, but not
something comparable to the Liberation Day reaction,” Schmieding
said.
European stocks are trading near record highs, with
Germany’s DAX and London’s FTSE index up more
than 3% this month, outperforming the S&P 500, which is
up 1.3%.
European defence shares are likely to benefit from
geopolitical tensions. Defence stocks have jumped
almost 15% this month, as the U.S. seizure of Venezuela’s
Nicolas Maduro fuelled concerns about Greenland.
Denmark’s closely managed crown will also likely be in
focus. It has weakened, but rate differentials are a major
factor and it remains close to the central rate at which it is
pegged to the euro and is not far from six-year lows.
“The U.S.-EU trade war is back on,” said Tina Fordham,
geopolitical strategist and founder of Fordham Global Foresight.
Trump’s latest move came as top officials from the EU and South
American bloc Mercosur signed a free trade agreement.
‘UNTHINKABLE SORTS OF DEVELOPMENTS’
The dispute over Greenland is just one hot spot.
Trump has also weighed intervening in unrest in Iran, while
a threat to indict Federal Reserve Chair Jerome Powell has
reignited concerns about its independence.
Against this backdrop, safe-haven gold remains near
record highs.
“Markets at this point are expected to reopen this week in
‘risk-off’ mode,” said IG market analyst Tony Sycamore.
“This latest flashpoint has heightened concerns over a
potential unravelling of NATO alliances and the disruption of
last year’s trade agreements with several European nations,
driving risk-off sentiment in stocks and boosting safe-haven
demand for gold and silver.”
The World Economic Forum’s annual risk perception survey,
released before its annual meeting in Davos, which will be
attended by Trump, identified economic confrontation between
nations as the number one concern replacing armed conflict.
While investors have grown increasingly wary of geopolitical
risk, they have also become used to it to some extent.
“Investor sentiment has proven quite resilient in the face
of the sort of continuing unthinkable sorts of developments,
which probably reflects a combination of like faith that Trump
just won’t be able to do all of the things that he talks about
mixed with a sense that none of this kind of moves the needle on
asset prices,” said Fordham.
Published on January 18, 2026