Wall Street slumps after Trump threatens 8 NATO members with punishing tariffs over Greenland
Stocks suffered big losses Tuesday after President Donald Trump intensified his rhetoric on Greenland, threatening to impose new tariffs on countries opposing the sale of the Danish territory to the United States.
Treasury yields spiked and the U.S. dollar declined as Trump’s threat caused a flight from U.S. assets.
The Dow Jones Industrial Average
shed 620 points, or 1.28%. The S&P 500
dipped 1.6% — on pace for its worst day in two months — and the Nasdaq Composite
slid 1.8%. The Cboe Volatility Index (VIX)
— Wall Street’s “fear gauge” — spiked to a high of 20.69, a level not seen since Nov. 25. It was last trading above 20.
Trump announced in a Truth Social post on Saturday that eight NATO members’ U.S. imports will face escalating tariffs “until such time as a Deal is reached for the Complete and Total purchase of Greenland.” The tariffs will start at 10% on Feb. 1 and rise to 25% on June 1, Trump said.
Trump then threatened to impose 200% tariffs on French wines and champagne, amid reports that the country’s president, Emmanuel Macron, is unwilling to join his so-called Board of Peace. Trump also hit out at the U.K., labeling the British government’s plan to hand over sovereignty of the Chagos Islands — one of which is the site of a U.K.-U.S. military base — to Mauritius as an “act of great stupidity.” He said the move was “another in a very long line of National Security reasons why Greenland has to be acquired.”
“On the other side of trade deficits and trade wars, there are capital and capital wars,” Dalio told CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland. “If you take the conflicts, you can’t ignore the possibility of the capital wars. In other words, maybe there’s not the same inclination to buy at U.S. debt and so on.”
European leaders have described Trump’s fresh tariff threats as “unacceptable” and are reportedly considering countermeasures — with France said to be pushing for the European Union to use its strongest economic counter-threat, known as the “Anti-Coercion Instrument.”
Trump, who is due to speak at the World Economic Forum in Davos, Switzerland, on Wednesday, said he had agreed to speak with European leaders at the conference to discuss his Greenland ambitions.
Treasury Secretary Scott Bessent defended Trump’s proposed takeover of Greenland to CNBC on Tuesday. “That will stop any kind of a kinetic war, so why not pre-empt the problem before it starts?” Bessent said.
Tuesday was set to be a broad sell-off with few stocks higher in early trading. Technology shares, most at risk from a move by investors into safe havens and a spike in yields slowing the economy, led the losses. Nvidia, AMD and Alphabet were all off by more than 2%.
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