Grafa logo

Greenland tariff threat triggers European slump as Wall Street braces

Written by Mahathir BayenaPublished Jan. 20 2026Last Updated Jan. 20 2026

Share

European stocks retreated and US equity futures signaled a sharp opening decline as investors grappled with President Donald Trump’s latest ultimatum: a 10% tariff on key allies to force a sale of Greenland.

The pan-European Stoxx 600 Index fell 0.7% in Tuesday morning trading, extending a 1.2% slide from Monday—its steepest daily drop since November.

The selloff was felt most acutely in Copenhagen, where the OMX 20 benchmark shed as much as 2.7% as Denmark finds itself at the epicenter of the territorial dispute.

In New York, traders returning from the Martin Luther King Jr. Day holiday prepared for a volatile session.

Futures tied to the S&P 500 tumbled 1.5%, while Nasdaq 100 contracts dropped 1.7%, reflecting heightened anxiety over a potential fracture in the transatlantic alliance.

The market turmoil follows a weekend of escalating rhetoric. President Trump threatened to impose an initial 10% levy on imports from eight European nations—including the UK, France, and Germany—starting Feb. 1.

He warned the rate would climb to 25% by June unless a deal is reached for the "complete and total purchase" of the Danish territory.

The move has reignited fears of a "spiral of escalation."

While equity markets sold off, the bond market saw a surge in Treasury yields as investors offloaded debt, balancing the geopolitical risk against concerns over US fiscal stability and Federal Reserve independence.

Despite the initial shock, some analysts suggest the losses could be mitigated by institutional checks.

Investors are closely watching the US Supreme Court, which is currently deliberating on the legality of the International Emergency Economic Powers Act (IEEPA)—the mechanism Trump is using to bypass Congress for tariff implementation.

For now, the "wait-and-see" approach remains dominant.

With European leaders preparing a coordinated response and Davos set to host global dignitaries later this week, the "Greenland wildcard" has firmly moved from a diplomatic curiosity to a core market risk.