Dollar, Stocks Fall on Trump's Greenland Coercion Tariffs
By Reuters | 20 Jan, 2026

Investors are spooked by Trump threats to ratchet up tariffs on European nations unless they support his bid to acquire Greenland.

European stocks fell on Tuesday and Wall Street futures hit one-month lows, while the dollar entered a second day of declines and the U.S. Treasury yield curve steepened, after the U.S. president threatened to reignite a trade war with Europe over Greenland.

President Donald Trump said he no longer thought "purely of Peace" after he did not win the Nobel Peace Prize and reiterated a threat to increase tariffs on EU members Denmark, Finland, France, Germany, Sweden, and the Netherlands, along with Britain and Norway, until the U.S. is allowed to buy Greenland.

EU leaders will discuss options, including tariffs worth 93 billion euros ($109 billion) on U.S. imports, at an emergency summit in Brussels on Thursday. 

Stock markets fell, extending Monday's declines, as the threats from the U.S. reignited a debate over the "Sell America" trade that emerged after Trump's "Liberation Day" levies announced last April.

Europe's STOXX 600 was down 1.2% on the day at 1237 GMT, having already fallen 1.2% on Monday, while the MSCI World Equity Index was down 0.2%. The FTSE 100 was down 1%.

U.S. Treasury Secretary Scott Bessent told reporters in Davos on Tuesday that he was confident that the U.S. and European countries would find a solution over the Trump administration's aim to take over Greenland, brushing off "hysteria" about a possible trade war.

U.S. stock futures pointed towards further losses on Wall Street, with S&P 500 futures down 1.4% and Nasdaq futures down 1.6%, both having eased slightly after touching a one-month low earlier in the session.

TARIFFS THREATENED ON FRENCH WINES AND CHAMPAGNE 

Trump separately threatened to hit French wines and champagne with 200% tariffs, in an apparent effort to cajole French President Emmanuel Macron to join his Board of Peace initiative.

Amelie Derambure, senior multi-asset portfolio manager at Amundi in Paris, said that the downward move in markets was "precautionary profit-taking and some risk reduction", but that markets were helped by the macroeconomic backdrop. 

Recent economic data has pointed to growth and decelerating inflation, and her portfolios remain risk-orientated, she said.

"The situation in Greenland (is) worrying the markets. For the moment it remains relatively contained, there is no panic," she said.

"I don’t see for the moment anything comparable to Liberation Day or to something very dramatic for markets," she added.

The dollar index was down 0.6% at 98.461 in its second day of declines, and the euro was up 0.8% against the dollar at $1.1734, having earlier hit its highest since January 2.

U.S. GOVERNMENT BOND YIELDS SPIKE

As investors weighed up the risk of Trump reigniting a trade war with Europe over Greenland, U.S. Treasury yields hit their highest since September in early trading.

U.S. markets were closed on Monday for a public holiday, so the moves were a delayed reaction to the developments that began over the weekend. 

The yield curve between 2-year and 10-year U.S. Treasuries, and between 10-year and 30-year U.S. Treasuries, steepened by the most since October.

Elsewhere, Japanese government bond yields hit record highs over concerns that tax cuts will make the government's finances worse. Japanese Prime Minister Sanae Takaichi called a snap general election on Monday.

Oil prices edged higher, with Brent crude futures up 0.8% at $64.42 a barrel and U.S. West Texas Intermediate up 1% at $60.06 a barrel, as prices were supported by expectations for global economic growth. 

Gold hit a record high, rising above $4,700 an ounce.

($1 = 0.8535 euros)

(Reporting by Elizabeth Howcroft in Paris; editing by Barbara Lewis and Jan Harvey)