Stock markets in Asia have fallen and precious metals rallied after European countries considered retaliating to US president Donald Trump’s threat to impose 10% tariffs in a dispute over Greenland.
The Financial Times reported EU capitals were considering hitting the US with €93bn of tariffs, or restricting American companies from the bloc’s market, in response to Trump’s pledge to impose tariffs from 1 February on UK, Norway and six EU countries that sent troops to the autonomous Danish territory for a military exercise last week. Trump has repeatedly said he wants the US to take over the strategically important Arctic island to stop China or Russia doing so, a move opposed by the eight nations.
The paper said the EU prepared a list of tariffs last year after Trump first launched US tariffs on countries across the world. It suspended these to avoid a full-blown trade war but ambassadors in the 27-nation bloc discussed reactivating them yesterday.
Pledging solidarity with Denmark and the people of Greenland, EU Commission president Ursula von der Leyen tweeted: “Tariffs would undermine transatlantic relations and risk a downward spiral. Europe will remain united, coordinated and committed to upholding its sovereignty.”
According to the BBC, UK prime minister Keir Starmer spoke to Trump yesterday, and other Nato leaders, and told him that “applying tariffs on allies for pursuing the collective security of Nato allies is wrong”.
Tony Sycamore, market analyst at IG Group, told the Guardian: “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.”
In Asia, Japan’s Nikkei 225 fell 0.7% while Hong Kong’s Hang Seng index slid 1% and India’s stock market retreated 0.6%. Gold rose 1.5% to $4,665 an ounce.