Global financial markets fell sharply after former US President Donald Trump threatened to impose new tariffs on several NATO allies amid a dispute over Greenland. The announcement triggered a broad risk-off reaction, sending US stock futures and European markets lower as investors reassessed geopolitical risks.
In early trading, S&P 500 futures dropped 1.8%, Dow Jones futures fell 1.6%, and Nasdaq futures slid 1.8%. European markets followed suit, with major indices in Paris, Frankfurt, and London declining more than 1% for a second consecutive day. The sell-off reflected growing concerns over escalating trade tensions between the US and its European partners.
As uncertainty increased, investors shifted toward safe-haven assets. Gold surged 3% to a record $4,733 per ounce, while silver jumped more than 7%. This movement highlights how geopolitical shocks often drive capital away from equities and into assets perceived as more stable during periods of global tension.
The turmoil stems from Trump’s announcement that the US could impose a 10% import tariff starting in February on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland. The move was reportedly linked to these countries’ opposition to Trump’s proposal to bring Greenland, an autonomous Danish territory, under US control. European leaders have reacted strongly, considering retaliatory tariffs and other countermeasures.
Despite the market reaction, some analysts believe the situation may ease through negotiations. While geopolitical developments remain a key short-term risk, past experience suggests that tariff threats do not always translate into lasting policy. Investors are now shifting focus to upcoming central bank meetings and inflation data, which will play a crucial role in shaping market direction in the weeks ahead.
