Trump Greenland Tariffs Send European Stocks Tumbling

The transatlantic relationship just got a lot more complicated.

President Trump announced 10% tariffs on eight European countries Saturday, effective February 1, as leverage for what he calls the "complete and total purchase of Greenland." The targeted nations—Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland—face escalating duties to 25% by June 1 if no deal emerges.

European markets opened sharply lower Monday. The Stoxx 600 fell 1.3%, on track for its worst session in two months. German automakers led losses, with BMW dropping 4% and Volkswagen sliding 3.2%.

US futures followed suit despite markets being closed for Martin Luther King Jr. Day. Dow futures fell 0.6%, S&P 500 futures dropped 0.7%, and Nasdaq 100 futures shed 1%.

Europe's Response

European leaders aren't backing down.

The EU's 27 member nations convened an emergency meeting Sunday to coordinate their response. French President Emmanuel Macron requested activation of the Anti-Coercion Instrument—the bloc's so-called "trade bazooka"—which would allow retaliatory measures against US goods.

Reuters reported that EU capitals discussed tariffs of up to $108 billion on American products. That's roughly equivalent to total US goods exports to the EU in a typical quarter.

British Prime Minister Keir Starmer called the move "completely wrong," adding that "applying tariffs on allies for pursuing the collective security of NATO allies" undermines the alliance.

Danish Foreign Minister Lars Lokke Rasmussen was blunter: "Greenland is not for sale. It never was. It never will be."

The Strategic Calculation

Trump framed the acquisition as a national security imperative. He cited the "Golden Dome" defense system and pointed to Russian and Chinese interest in the Arctic as justification.

Greenland sits in a strategically important location for monitoring Russian submarine activity and controlling North Atlantic shipping routes. The US has maintained a military presence at Thule Air Base since 1951.

But the tariff approach creates new problems. Targeting eight NATO allies simultaneously over a territorial dispute risks fracturing the alliance at a moment when unity against Russia matters.

Analysts at Citigroup warned that the tariffs could shave 0.25 percentage points off European GDP this year. That estimate assumes no escalation—a big assumption given the rhetoric from both sides.

Market Implications

The tariff announcement adds another layer of uncertainty to markets already dealing with Fed policy questions and geopolitical tensions.

Gold rallied to new highs above $4,660 per ounce as investors sought havens. That extends a run we've been tracking since precious metals hit records last week.

European equities face the most direct pressure. Export-oriented German manufacturers are particularly exposed—autos, machinery, and chemicals make up a significant share of European exports to the US.

For American investors, the calculus is more nuanced. Higher tariffs function as a tax on imports, which could feed through to inflation at a time when the Fed is weighing its next move on rates. The recent trajectory of Fed policy already points toward fewer cuts in 2026.

What Happens Next

The February 1 deadline gives both sides roughly two weeks to negotiate. That's not much time for a deal involving territorial sovereignty.

More realistically, this looks like the opening move in a prolonged standoff. European leaders have made clear that Greenland's status isn't negotiable—which means the tariffs will likely take effect.

The question then becomes whether this remains contained to Europe or signals a broader protectionist turn. The US-Taiwan chip deal signed last week shows the administration is willing to use trade policy to achieve strategic objectives. Investors should expect more of the same.

For now, US markets get a day off to digest the news. The real test comes Tuesday when trading resumes and Netflix kicks off a busy earnings week.