The dollar and Wall Street stocks fell on Tuesday after Donald Trump said there was “no going back” on his campaign to take control of Greenland even as he offered talks over the issue that has put the US and its European allies at loggerheads.
The US currency fell 0.8 per cent against the euro, while the S&P 500 was down 1.6 per cent amid increasing transatlantic tensions and threats of a trade war. The tech-focused Nasdaq Composite index was down 1.8 per cent.
European equities also fell on Tuesday, with the Stoxx Europe 600 closing 0.7 per cent lower.
Trump said in a post on his Truth Social platform early in the day that he had “agreed to a meeting of the various parties in Davos, Switzerland”, where he will attend the World Economic Forum this week.
But, despite what he said was a “very good” call with Nato secretary-general Mark Rutte, the US president said that “there can be no going back” on his plan to seize Greenland.
He posted what appeared to be an AI-generated image of himself, vice-president JD Vance and secretary of state Marco Rubio in the vast Arctic island with an American flag and a sign reading: “US territory EST 2026”.
Denmark has sent a “substantial contribution” of soldiers and the head of its army to the autonomous territory this week, in addition to the more than 200 troops already present there.
Danish Prime Minister Mette Frederiksen said on Tuesday that her country needed “to stand firm and show what we are made of” even as it was “threatened by our closest ally”.
Trump’s threat to impose 10 per cent tariffs on eight European states that recently sent military personnel to Greenland has raised the spectre of a trade war, plunging the transatlantic relationship into crisis.
European Commission president Ursula von der Leyen said at Davos that Brussels would respond in an “unflinching, united and proportional” way to US pressure.
She added that “the seismic change we are going through today” made it necessary “to build a new form of European independence”, suggesting that Trump had put the US-EU trade deal agreed last year into question.
The European parliament on Tuesday suspended ratification of the trade deal and the EU is likely to impose tit-for-tat tariffs if Trump follows through on his threats.
Belgian Prime Minister Bart De Wever added that the idea of “appeasing” Trump had “reached its endpoint”, as he urged the bloc to “call his bluff now”. Referring to Europe’s relationship with the US, he added: “Living as a happy vassal is one thing, existing as a miserable slave is another.”
But US Treasury secretary Scott Bessent, also speaking at the World Economic Forum, urged America’s trading partners to “take a deep breath and let things play out”, adding that “the worst thing countries can do is escalate against the US”.
He stressed America’s support for Nato, saying “of course Europe is an ally”.
Trump also accused the UK of “great stupidity” over its plan to transfer ownership of the Chagos Islands, including the US air base of Diego Garcia, to Mauritius. He cited the move as “another in a very long line of National Security reasons why Greenland has to be acquired”.
The US president posted messages from Emmanuel Macron, in which the French president said: “I do not understand what you are doing on Greenland.”