Markets endured sharp corrections on Tuesday at the opening bell in New York President Donald Trump's intensified rhetoric regarding Greenland, which included threats of new levies on nations resisting the sale of the Danish territory to the US, CNBC reported.
The greenback declined while Treasury yields rose as the president's ultimatum drove capital away from US assets, according to CNBC.
The Dow Jones Industrial Average surrendered 725 points, or approximately 1.5%. The S&P 500 fell 1.3% – heading for its worst performance in two months – while the Nasdaq Composite lost 1.5%, CNBC noted.
In a Truth Social post on Saturday, Trump stated that US imports from eight NATO members will face rising duties "until such time as a Deal is reached for the Complete and Total purchase of Greenland." The tariffs will commence at 10% on February 1 and increase to 25% on June 1, according to the report.
Trump then threatened to enact 200% tariffs on French wines and champagne, citing reports that French President Emmanuel Macron is unwilling to join his so-called Board of Peace. Trump also targeted the UK, labeling the government's plan to cede sovereignty of the Chagos Islands (in the Indian Ocean) – home to the UK-US military site Diego Garcia that also serves US troops – to Mauritius (an island nation in East Africa) as an "act of great stupidity." He claimed this was "another in a very long line of National Security reasons why Greenland has to be acquired," CNBC reported.
US exchanges were shuttered Monday for the Martin Luther King Jr. Day holiday.
"With the US off yesterday the implications of the tariff threats over Greenland had yet to fully percolate through financial markets," Deutsche Bank strategist Jim Reid said in a Tuesday note covered by CNBC. "Markets have reacted but there's clearly room for bigger moves if the rhetoric increases further."
There are "growing fears about some kind of retaliatory trade escalation from Europe, with increasingly strong comments from several officials," Reid noted, according to the outlet.
European figures have described the fresh threats as "unacceptable" and are reportedly considering retaliation – with France reportedly pushing for the European Union to deploy its strongest economic counter-measure, known as the "Anti-Coercion Instrument" (an EU economic defense tool), CNBC reported.
Trump, who is set to address the World Economic Forum in Davos (a Swiss alpine resort town) on Wednesday, stated he had agreed to confer with European leaders at the event to discuss his Greenland ambitions, according to the report.
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.
