Trump threatens sweeping tariffs on European allies over Greenland, rattling markets and lifting gold and silver, though analysts expect limited impact due to legal challenges.
U.S. President Donald Trump has once again deployed tariffs as a geopolitical weapon, this time in a bid to assert control over Greenland, an autonomous territory within the Kingdom of Denmark.
What Is Trump Proposing? As the European Union (EU) pushes back against Trump’s suggestion of invading Greenland, the president has threatened to impose a 10% tariff on all goods exported to the U.S. from Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland, effective Feb. 1. This would come on top of the existing 10% tariff on U.K. goods and the 15% levy on EU exports.
Trump has further warned of a stepped-up 25% tariff starting June 1 if these nations do not relent. The tariffs, he said, would remain in place until Greenland is fully brought under U.S. control.
Why Trump Wants Greenland: The president has framed the threat in national security terms, arguing that Denmark lacks the capacity to counter a potential joint Russia-China incursion into Greenland, the world’s largest island located in the Arctic Ocean.
“World peace is at stake! China and Russia want Greenland, and there is not a thing that Denmark can do about it,” Trump said in a Truth Social post on Saturday. “Nobody will touch this sacred piece of land, especially since the national security of the United States, and the world at large, is at stake.”
EU’s Response: European leaders are weighing retaliatory measures, including counter-tariffs and the possible activation of the Anti-Coercion Instrument (ACI), widely viewed as the bloc’s most aggressive economic deterrent.
According to Reuters, EU ambassadors meeting Sunday agreed to prepare punitive steps should the U.S. follow through. Leaders of the 27-nation bloc are expected to discuss the issue further at an emergency meeting on Thursday.
The report added that the European Parliament has put on hold work on implementing the U.S.-EU trade deal reached in late July. The parliament had been scheduled to vote on removing several EU import duties on Jan. 26–27, but comments from senior lawmakers, including European People’s Party leader Manfred Weber, suggest approval is now unlikely.
Gold, Silver Rally, E-mini Futures Slip: Heightened geopolitical risk has fueled further gains in safe-haven assets. Gold and silver futures, already in strong uptrends, surged again.
COMEX gold futures (GC) gapped higher and crossed the $4,700-per-ounce mark for the first time on record, while silver futures broke above $94 an ounce, also setting a new all-time high.
Meanwhile, E-mini S&P 500 futures fell more than 1.35% early Tuesday as U.S. markets reopened following the Martin Luther King Jr. Day holiday.
Analysts Play Down the Threat: Morgan Stanley analysts expect the impact on Europe from Trump’s proposed tariffs to be limited, citing their view that the U.S. Supreme Court is likely to overturn the president’s “Liberation Day” tariffs imposed under the International Emergency Economic Powers Act (IEEPA), according to Investing.com.
Nearly half of Europe’s Greenland-related equity exposure falls under the IEEPA framework. If the court repeals the IEEPA-based tariffs, Trump may find it difficult to justify maintaining existing levies or enforcing the new Greenland-related measures.