Trade War Alert: Trump Threatens Tariffs on Europe Over Greenland Dispute

The prospect of a renewed trade war between the United States and Europe has rattled global markets, with President Donald Trump issuing an ultimatum involving punitive tariffs linked to his administration's bid to purchase Greenland. The geopolitical standoff threatens to weigh heavily on European currencies, particularly the EUR and Nordic pairs like DKK, NOK, and SEK.

Tariffs on the Horizon

President Trump announced that 10% tariffs would be imposed on goods from eight European nations—including heavyweights Germany, France, and the UK—starting February 1. He further escalated the threat, stating levies could rise to 25% by June 1 if a deal for the purchase of Greenland is not reached.

The inclusion of major Eurozone economies in the tariff target list presents a direct downside risk to the Euro, potentially forcing the European Central Bank (ECB) to reconsider its policy path if the trade shock dampens growth.

IMF Warnings and EU Retaliation

IMF Managing Director Kristalina Georgieva warned from Davos that diverting from normal trade relations poses a significant drag on global economic growth. Following this, the European Union is reportedly preparing a sharp counter-offensive. Sources indicate the bloc could impose retaliatory tariffs on €93 billion ($108 billion) worth of U.S. goods.

Key Market Drivers

• Tariff Start Date: February 1 with initial 10% levy.
• Escalation Risk: Tariffs rising to 25% by June 1.
• Safe Havens: Any concrete move toward implementation favors US Dollar (USD) and Gold (XAU).