Global markets are expected to face renewed volatility after United States President Donald Trump threatened to impose tariffs on eight European nations over a dispute regarding Greenland.
According to Reuters, Trump announced plans to levy a 10 per cent import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain. The tariff would rise to 25 per cent from 1 June if no agreement is reached.
The threatened measures follow a joint statement by the eight European states backing Greenland, while Ireland’s Prime Minister warned that the European Union would retaliate if U.S. tariff threats materialise.
Reuters reports that the move has rekindled fears of geopolitical disruptions reminiscent of the “Liberation Day” tariffs in April 2025, which sent shockwaves through global markets.
Analysts say investor sentiment may be tempered by past experiences, as markets showed resilience despite previous threats. “Hopes that the tariff situation has calmed down for this year have been dashed for now, and we find ourselves in the same situation as last spring,” said Holger Schmieding, chief economist at Berenberg Bank, according to Reuters.
The dispute has triggered safe-haven demand, with gold remaining near record highs. “Markets at this point are expected to reopen this week in ‘risk-off’ mode,” said Tony Sycamore, IG market analyst. “This latest flashpoint has heightened concerns over a potential unravelling of NATO alliances and the disruption of last year’s trade agreements with several European nations, driving risk-off sentiment in stocks and boosting safe-haven demand for gold and silver,” he added.
European stocks, however, remain near record highs, with Germany’s DAX and London’s FTSE posting gains of more than three per cent this month. Defence stocks have been among the biggest beneficiaries, jumping almost 15 per cent as geopolitical concerns mount, Reuters reports.
Tina Fordham, founder of Fordham Global Foresight, described the situation as a re-escalation of the U.S.-EU trade conflict. “The U.S.-EU trade war is back on,” she said, noting that Trump’s latest move comes just as EU officials and the South American bloc Mercosur signed a free trade agreement.
While markets are on edge, experts say the overall impact may be limited. “Investor sentiment has proven quite resilient in the face of continuing unthinkable sorts of developments,” Fordham added.
Reuters highlights that the euro may face pressure in the coming days as Asian trading begins, while the impact on the dollar is less clear, given its status as a safe-haven currency amid geopolitical tensions.
