Trump’s Greenland tariffs shake world stock markets
Stock futures fell on Monday as US President Donald Trump’s new tariffs on eight European countries over Greenland weighed on market sentiment.
Futures for the Euro Stoxx 50 dropped more than 1%, while S&P 500 futures fell 0.8%. US cash markets remained closed for the holiday, News.Az reports, citing Bloomberg.
The dollar weakened against all Group-of-10 currencies, losing the most to the Swiss franc and Japanese yen as investors sought safe-haven assets. The euro, meanwhile, recovered early losses and traded higher.
Trump announced on Saturday a 10% tariff, effective Feb. 1, on goods from European nations that have supported Greenland amid US threats to acquire the semi-autonomous Danish territory. He warned that the tariffs could rise to 25% in June unless “a Deal is reached for the Complete and Total purchase of Greenland.”
The announcement drew a quick rebuke from European leaders including French President Emmanuel Macron, who intends to request the activation of the European Union’s anti-coercion instrument — the bloc’s most powerful retaliatory tool. European Union lawmakers are also poised to halt approval of the trade deal with the US that was struck last year, setting a 15% US tariff for most EU goods.
“In the near term, any surprise escalation via tariffs on Europe could trigger a classic risk-off episode, especially after a strong start to the year supported by constructive sentiment,” said Florian Ielpo, head of macro research at Lombard Odier Asset Management. “In that scenario, government bonds could benefit, quality assets would likely outperform, and gold could catch a bid,” he added.
The impact is likely to be on equities in the short-term and less obvious for bonds and currencies, according to Vincent Mortier, chief investment officer at Amundi SA. The US holiday on Monday also suggests thinner market conditions and no Treasury cash trade overnight.
The fallout from the news “could have some negative impact on European growth prospects but most probably on a very limited scale,” Mortier said. “Longer term, that could be a positive catalyst for Europe to accelerate its strategic autonomy agenda and form new alliances.”
Trump’s tariff threat could prove an unwelcome interruption to the rally in European equities, which have outperformed their US peers as investors poured into various regional sectors from defense to miners and chip-equipment makers. The region’s outlook has been boosted by increased German fiscal spending, lower interest rates and expectations of improving profits.
Since the start of 2025, the Stoxx Europe 600 has climbed 36% in dollar terms, double the S&P 500’s gains over the same period. The European benchmark now trades at nearly 16 times forward earnings, above its average over the past 15 years and narrowing its discount to US peers to about 30%.
“The year had started pretty well across financial markets but this new situation may trigger some profit taking,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “If one looks strictly at the raised tariffs, it’s something that economically could be absorbed but the possibility of a break within the Western world would have consequences that I fail to measure the scale of.”
Citigroup Inc. strategists led by Beata Manthey have previously estimated that a 10% tariff on Europe should result in a 2 to 3 percentage-point drag on European earnings-per-share growth.
The picture is worse for those most exposed to the US levies. A Goldman Sachs Group Inc. basket of exposed companies including shipping firm A.P. Moller - Maersk A/S, carmaker BMW AG and electrical-equipment maker Legrand SA was barely changed last year while the Stoxx 600 rallied 17%.
Luxury goods, carmakers as well as miners were among sectors that came under pressure after Trump’s “Liberation Day” in April. Stocks exposed to international value chains, such as consumer discretionary and everyday goods, could also be impacted.
Still, any reaction might be short-lived until there’s more clarity on the situation. Defense stocks could also rally, said ING’s Juvyns, limiting the scope of a selloff.
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