Markets have slumped, safe-have assets soared and geopolitical tensions between the United States and its European allies have escalated sharply, according to multiple media reports. The developments come after President Donald Trump threatened to impose significant tariffs on European nations in an effort to secure US control of Greenland.
The dispute, which the US president insists is motivated by national security needs, intensified after diplomatic talks failed to resolve the “fundamental disagreement” over the Danish autonomous territory.
Trump announced a series of fresh levies over the weekend, warning he would impose a ten percent tariff on eight European nations – Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland – starting from 1 February. He said duty would then rise to 25 percent from 1 June unless the countries agree to the full acquisition of Greenland by the US.
[See more: Talks in Washington over Greenland end in ‘fundamental disagreement’]
“With Trump throwing tariffs into the mix, it is clear that his threat to Greenland is real, and that we could be one step closer to the end of NATO and political imbalances within Europe,” one analyst told the Reuters news agency.
Danish Prime Minister Mette Frederiksen earlier rejected Trump’s demands, stating that “Europe will not be blackmailed,” urging the US to “stop threatening a historically close ally.”
Europe plans countermeasures amid market turmoil
European Union (EU) ambassadors have broadly agreed to step up efforts to dissuade Trump from imposing the duties, while also drafting countermeasures. President of the European Council, António Costa, warned on social media that the tariffs “undermine transatlantic relations and risk a dangerous downward spiral,” while confirming the EU’s “full solidarity with Denmark and the people of Greenland.”
The bloc is considering a tariff on €93 billion ($108 billion) of US imports, potentially to be enacted on 6 February. In a move that highlights the seriousness of the threat, the EU is also discussing the activation of its Anti-Coercion Instrument (ACI).
The ACI is the bloc’s strongest retaliatory tool and would enable the EU to curb imports, restrict access to public tenders and investments, and limit trade in banking and digital services where the US holds a trade surplus. Furthermore, a German politician suggested the extreme “last resort” measure of boycotting the upcoming FIFA World Cup in the US to pressure the Trump administration over the Greenland issue.
[See more: European troops arrive in Greenland amid continued US threats]
The prospect of a damaging trade war between global economic heavyweights has sent tremors through financial markets.
Investors are piling into safe-haven assets, with gold prices surging to a peak of $4,690.59 per ounce, while silver struck $94.12. Stock markets across Asia retreated, with losses recorded in Tokyo, Hong Kong, Shanghai, Sydney, Singapore, and Wellington, although Seoul and Taipei bucked the trend with small gains. European and US futures sank, and the US dollar weakened against other major currencies, including the euro, sterling, and yen.
