Tariff Threats Return as Markets Slide on Greenland Dispute

Tariff Threats Return as Markets Slide on Greenland Dispute

Trump’s proposed trade penalties spark volatility, lift gold prices and pressure European stocks

Global markets have come under renewed pressure after Donald Trump revived the threat of import tariffs, raising fears of another sharp sell-off similar to previous trade shocks. Investors are once again moving into safe-haven assets as uncertainty grows across Europe and currency markets.

Trump Threatens New Tariffs on Europe

The latest bout of volatility follows warnings from the US president that he could impose 10% tariffs from 1 February, rising to 25% from 1 June, on imports from eight European countries. The move is aimed at Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland.

The tariffs are being framed as retaliation for Europe’s refusal to support Trump’s long-standing proposal for the United States to take control of Greenland, a Danish territory.

Markets have seen this playbook before. In April last year, a similar announcement of country-specific tariffs triggered a broad equity sell-off, and investors fear history could be repeating itself.

Safe-Haven Assets Surge

As risk appetite fades, investors have moved quickly into assets traditionally seen as stores of value.

• Gold surged to a fresh record high of $4,690 per ounce
• Silver climbed above $94 per ounce, its highest level on record
• Copper prices also moved higher

The rally reflects concerns over escalating trade tensions, geopolitical risk and the potential impact on global growth.

Pound Rises as Dollar Weakens

Trade uncertainty has also weighed on the US dollar. Sterling strengthened, with £1 trading close to $1.34, as investors reassessed the outlook for US trade policy and economic stability.

Currency markets often react sharply to tariff threats, particularly when they involve major trading partners and raise the risk of retaliatory measures.

European Stock Markets Fall

While US stock markets were closed for a public holiday, European equities reacted swiftly.

In the UK, the FTSE 100 fell around 0.5%, reflecting weaker sentiment across the region.

Losses were particularly pronounced in Scandinavia:

• Denmark’s OMX Copenhagen 20 dropped 2.7%
• Norway’s Oslo Børs fell more than 1.4%
• Finland’s Helsinki 25 declined 1.8%

The broad sell-off highlights how exposed European markets are to renewed trade tensions with the US.

Greenland at the Centre of the Dispute

The market reaction has been amplified by the political rhetoric surrounding Greenland. In a letter circulated among European diplomats, Trump reportedly linked the issue to global security and NATO, questioning Denmark’s ability to defend the territory from Russia or China.

He also suggested that Europe’s refusal to award him the Nobel Peace Prize had freed him to prioritise US interests more aggressively, including economic pressure on allies.

Denmark has firmly rejected any suggestion of selling Greenland, while European officials have warned that further escalation would have serious consequences for transatlantic relations.

Why Markets Are Nervous

Investors are particularly sensitive to tariff threats because of their unpredictable economic impact. Higher import taxes can:

• Disrupt global supply chains
• Increase inflationary pressures
• Reduce corporate profits
• Trigger retaliatory trade measures

With memories of previous tariff-driven sell-offs still fresh, markets have reacted quickly to price in higher risk.

Outlook: Volatility Likely to Persist

The sharp move into gold and the sell-off in European equities suggest investors are bracing for further uncertainty. Unless tensions ease or negotiations begin, markets could remain volatile in the days ahead.

For now, Trump’s renewed tariff threats have reintroduced a familiar risk into global markets — one that investors know can escalate quickly and leave lasting damage if left unresolved.

Sources: (SKY.com, Investing.com)