Key Points
- President Trump has threatened new tariffs on eight European nations over their support for Greenland.
- The tariffs will start at 10% on February 1 and could rise to 25% on June 1. The move threatens to reignite the U.S.-EU trade war.
- The euro is expected to come under pressure, while European defense stocks could benefit.
- The news comes amid rising geopolitical tensions and economic uncertainty.
Global markets are bracing for a new round of volatility this week after President Donald Trump threatened to impose new tariffs on eight European nations. The move is a direct response to their support for Greenland amid U.S. threats to seize the territory.
Trump announced that he will impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain, starting on February 1. He said the tariffs will rise to 25% on June 1 if no deal is reached for the U.S. to buy Greenland.
“Hopes that the tariff situation has calmed down for this year have been dashed for now,” said one economist. “We find ourselves in the same situation as last spring.”
Back in April 2025, Trump’s sweeping “Liberation Day” tariffs sent shockwaves through financial markets. While investors had largely ignored his trade threats in the second half of the year, this new move suggests the lull is over.
The euro is expected to come under pressure, and while the U.S. dollar is still seen as a haven, it could also be hurt by Washington’s role at the center of this new geopolitical storm.
European stocks, which have been trading near record highs, are likely to take a hit. However, one sector that could benefit is the European defense sector. These stocks have already jumped almost 15% this month amid rising geopolitical tensions.
This latest trade spat is just one of many hot spots around the world. With ongoing tensions in Iran and concerns about the independence of the U.S. Federal Reserve, investors are on edge. Safe-haven assets like gold are trading near record highs.
While some analysts believe investor sentiment has become more resilient to such “unthinkable” developments, the threat of a renewed U.S.-EU trade war is serious. It could have a major impact on the global economy.
