Stocks slide as Trump doubles down on Greenland ambitions despite European pushback

With US exchanges shut on Monday, on Tuesday traders finally got the chance to react to the president’s tariff threats and escalation over Greenland. The only winners so far are precious metals like gold and silver.

In a Truth Social post on Saturday, Trump warned that the US would impose tariffs on European countries — Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland — unless a deal is reached for the “Complete and Total purchase of Greenland.”

The touted 10% tariffs on “any and all goods” shipped to the US from the eight countries would take effect February 1, rising to 25% by the start of June if an agreement isn’t reached.

High-beta stocks, including many of the darlings of the AI trade and Big Tech, opened sharply lower and fell over the course of the day.

A number of private messages between the president and European leaders have also been released, with Trump explaining in one text exchange between himself and Norwegian Prime Minister Jonas Støre that not being awarded the Nobel Peace Prize is figuring into his current approach.

Amid the sea of red, precious metals (once again) are shining. Spot gold has gained another 3%, taking it to a record $4,736 per ounce, while silver also leaped to a new high of $95.26 per ounce, extending its remarkable rally.

The fact that the president has yet to show any real interest in dialing down his Greenland plans has spooked markets, which had previously priced any significant escalation of a trade war as relatively unlikely.

The Takeaway

One popular market narrative over the last year has been that Trump often employs tariffs as a threat, using them primarily as a tool to bargain with. But the “Trump Always Chickens Out” argument isn’t really borne out by the data. As Luke Kawa pointed out last year, the reality is that the US has raised its levies rate on both occasions that Trump has been in the White House, suggesting that the more accurate acronym is really: “Trump Always Raises Tariffs.” With the prospect of European retaliation, and the president’s stance seemingly hardening, the risks to global trade seem a lot higher than they were a week ago.