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World Markets Jolted, Euro Softens, as Trump Vows Tariffs on Europe over Greenland
A person walks along a street on the day of the meeting between top US officials and the foreign ministers of Denmark and Greenland, in Nuuk, Greenland, January 14, 2026. Photo: REUTERS/Marko Djurica/File Photo
Global markets are facing volatility after President Donald Trump vowed to slap tariffs on eight European nations until the US is allowed to buy Greenland, news that pushed the euro to a seven-week low in late Sunday trading.
Trump said he would impose an additional 10 percent import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which will rise to 25 percent on June 1 if no deal is reached.
Major European Union states decried the tariff threats over Greenland as blackmail on Sunday. France proposed responding with a range of previously untested economic countermeasures.
As early trade kicked off in Asia-Pacific, the euro fell 0.2 percent to around $1.1572, its lowest since November. Sterling also dipped, while the yen firmed against the dollar.
“Hopes that the tariff situation has calmed down for this year have been dashed for now – and we find ourselves in the same situation as last spring,” said Berenberg chief economist Holger Schmieding.
Trump‘s sweeping “Liberation Day” tariffs in April 2025 sent shockwaves through markets. Investors then largely looked past US trade threats in the second half of the year, viewing them as noise and responding with relief as Trump made deals with Britain, the EU and others.
While that lull might be over, market moves on Monday could be dampened by the experience that investor sentiment had been more resilient than expected in 2025 and global economic growth stayed on track.
US markets are closed on Monday for Martin Luther King Jr. Day, which means a delayed reaction on Wall Street.
The implications for the dollar were less clear. It remains a safe haven, but could also feel the impact of Washington being at the center of geopolitical ruptures, as it did last April.
Bitcoin, a liquid proxy for risk that is open to trade at the weekend, was steady, last trading at $95,330.
Capital Economics said countries most exposed to increased U.S. tariffs were the UK and Germany, estimating that a 10 percent tariff could reduce GDP in those economies by around 0.1 percent, while a 25 percent tariff could knock 0.2–0.3 percent off output.
European stocks are near record highs. Germany’s DAX and London’s FTSE index are up more than 3 percent this month, outperforming the S&P 500, which is up 1.3 percent.
European defense shares will likely continue to benefit from geopolitical tensions. Defense stocks have jumped almost 15 percent this month, as the US seizure of Venezuela’s Nicolas Maduro fueled concerns about Greenland.
Denmark’s closely managed crown will also likely be in focus. It has weakened, but rate differentials are a major factor and it remains close to the central rate at which it is pegged to the euro, and not far from six-year lows.
“The US-EU trade war is back on,” said Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight.
Trump‘s latest move came as top officials from the EU and South American bloc Mercosur signed a free trade agreement.
HOT SPOTS EVERYWHERE
The dispute over Greenland is just one hot spot.
Trump has also weighed intervening in unrest in Iran, while a threat to indict Federal Reserve Chair Jerome Powell has reignited concerns about the US central bank’s independence.
Against this backdrop, safe-haven gold remained near record highs.
Given Trump’s recent Fed attacks, an escalation with Europe could pile pressure on the dollar if it adds to worries that US policy credibility is becoming critically impaired, said Peel Hunt chief economist Kallum Pickering.
“(This) could be amplified by a desire, especially among Europeans, to repatriate capital and shun US assets, which may also pose downside risks to lofty US tech valuations,” he added.
The World Economic Forum’s annual risk perception survey, released before its annual meeting in Davos next week, which will be attended by Trump, identified economic confrontation between nations as the number one concern replacing armed conflict.
A source close to French President Emmanuel Macron said he was pushing for activation of the “Anti-Coercion Instrument,” which could limit access to public tenders, investments or banking activity or restrict trade in services, in which the US has a surplus with the bloc, including digital services.
“With the US net international investment position at record negative extremes, the mutual inter-dependence of European-US financial markets has never been higher,” said Deutsche Bank’s global head of FX research George Saravelos in a note.
“It is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets.”
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Amid Iran Standoff, Witkoff and Kushner Pose Aboard USS Abraham Lincoln Aircraft Carrier
Steve Witkoff (R) aboard the aircraft carrier Lincoln. Photo via i24 / social media used in accordance with Clause 27a of the Copyright Law
i24 News – Special US envoys Steve Witkoff and Jared Kushner visited on Saturday the USS Abraham Lincoln aircraft carrier.
The duo, who led the US in the indirect nuclear talks with Iran on Friday, visited the aircraft carrier at the invitation of US Central Command chief, Adm. Brad Cooper.
The carrier arrived in the region last week as part of a US “armada” amid rising tensions with the Islamic regime of Iran. It is stationed in the Arabian Sea.
The visit came hours after US President Donald Trump stated that while the talks went well, “But I think Iran looks like they want to make a deal very badly, as they should. Last time, they decided maybe not to do it, but I think they probably feel differently. We’ll see what the deal is. It’ll be different than last time. And we have a big armada. We have a big fleet heading in that direction. It’ll be there pretty soon. So we’ll see how that works out.”
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Pentagon Says It Will Cut Academic Ties With Harvard University
U.S. Defense Secretary Pete Hegseth arrives to administer the oath to U.S. Army National Guard soldiers during a re-enlistment ceremony at the base of the Washington Monument in Washington, D.C., U.S., February 6, 2026. REUTERS/Jonathan Ernst
Pentagon chief Pete Hegseth said on Friday his department was ending professional military education, fellowships, and certificate programs with Harvard University, marking the Trump administration’s latest escalation against the school.
President Donald Trump’s administration has cracked down on top US universities, including Harvard, over a range of issues such as pro-Palestinian protests against US ally Israel’s assault on Gaza, diversity programs, transgender policies and climate initiatives.
“Starting now and beginning in the 2026-27 school year, I am discontinuing all graduate level Professional Military Education (PME), all fellowships and certificate programs between Harvard University and the War Department for active duty service members,” Hegseth, who himself holds a master’s degree in public policy from the Harvard Kennedy School, said on X.
The policy will apply to service members enrolling in future programs while those currently enrolled will be allowed to finish their courses, Hegseth said.
He also added that the Pentagon will evaluate similar relationships with other universities in the coming weeks.
Rights advocates have raised free speech, academic freedom and due process concerns over the government’s actions against universities.
A Harvard spokesperson directed Reuters to a page on the history of the university’s ties with the US military that says Harvard has played a “significant role” in America’s military traditions since the nation’s founding.
TRUMP-HARVARD TENSIONS CONTINUE
The university has previously sued the Trump administration over the government’s attempt to freeze federal funding.
Hegseth accused Harvard of “hate America activism,” also calling the university antisemitic in a reference to pro-Palestinian protests.
Protesters, including some Jewish groups, say the government wrongly equates criticism of Israel’s assault on Gaza with antisemitism and advocacy for Palestinian rights with support for extremism.
Harvard has condemned discrimination on campus. Its antisemitism and Islamophobia task forces found last year that Jews and Muslims faced bigotry after the start of Israel’s war in Gaza following an October 2023 Hamas attack.
Trump’s attempts to freeze federal funds for Harvard have faced legal resistance and the two sides have failed to reach a deal thus far.
Trump said this week his administration was seeking $1 billion from Harvard to settle probes into school policies.
Some Ivy League schools have reached agreements with the Trump administration and accepted certain government demands. Columbia University has agreed to pay more than $220 million to the government while Brown University has agreed to pay $50 million to support local workforce development.
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Netanyahu Expected to Meet Trump in US on Wednesday and Discuss Iran
Israeli Prime Minister Benjamin Netanyahu signs the joint declaration of mutual recognition with Somaliland President Muse Bihi Abdi, officially establishing full diplomatic relations between the two nations. Photo: Screenshot
Israeli Prime Minister Benjamin Netanyahu is expected to meet US President Donald Trump on Wednesday in Washington, where they will discuss negotiations with Iran, Netanyahu’s office said on Saturday.
Iranian and US officials held indirect nuclear talks in the Omani capital Muscat on Friday. Both sides said more talks were expected to be held again soon.
A regional diplomat briefed by Tehran on the talks told Reuters Iran insisted on its “right to enrich uranium” during the negotiations with the US, and that Tehran’s missile capabilities were not raised in the discussions.
Iranian officials have ruled out putting Iran’s missiles – one of the largest such arsenals in the Middle East – up for discussion, and have said Tehran wants recognition of its right to enrich uranium.
PRIME MINISTER SEEKS MISSILE CURBS
“The Prime Minister believes any negotiations must include limitations on ballistic missiles and a halting of the support for the Iranian axis,” Netanyahu’s office said in a statement.
Wednesday’s meeting would be the seventh between Netanyahu and Trump since the US president returned to office in January last year.
The pair had been expected to meet on February 18, but the talks were brought forward amid the renewed engagement with Iran. A spokesperson for Netanyahu did not immediately comment on why the date was moved up.
Last June, the US joined an Israeli military campaign against Iran’s uranium enrichment and other nuclear installations, marking the most direct American military action ever against the Islamic Republic.
Iran retaliated by launching a missile attack on a US base in Qatar.
The US and Israel have repeatedly warned Iran that they would strike again if Tehran pressed ahead with its enrichment and ballistic missile programs.
World powers and regional states fear a breakdown in the negotiations would ignite another conflict between the US and Iran that could spill over to the rest of the oil-producing region.
Iran has vowed a harsh response to any strike and has cautioned neighboring Gulf Arab countries that host US bases that they could be in the firing line if they were involved in an attack.