U.S. stock futures fell sharply Tuesday morning, signaling investor concern over President Donald Trump’s tariff threats against his European allies amid his attempt to seize Greenland.
Key data
In early trading this Tuesday, the benchmark S&P 500 futures index plummeted 1.73%, to 6,856 points, while Dow Jones futures fell 1.61%, to 48,751 points.
The technology-focused Nasdaq futures index was the hardest hit, falling more than 2% to 25,157 points.
European markets were also hit, with the STOXX Europe 50, a pan-European index, falling 1.32% amid Trump’s threats to impose new tariffs on countries that oppose his attempt to seize Greenland.
The London Stock Exchange’s benchmark index, the FTSE 100, plummeted 1.32%, while Germany’s DAX and France’s CAC 40 fell 1.37% and 1.20% respectively.
What do we know about Trump’s tariff threat towards Europe?
On Saturday, Trump announced that he will impose a 10% tariff on eight European countries that recently deployed military personnel to Greenland following his threat to take control of the Danish territory.
In a post on Truth Social announcing the decision, Trump indicated that Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland will be affected and that the tariff will take effect on February 1.
The broad tax covers all exports, will rise to 25% in June and will remain in effect until the United States takes control of Greenland.
Read more: From anecdote to reality: this is the diplomatic crisis over Greenland
What about other tariff threats against European countries?
French President Emmanuel Macron publicly criticized Trump’s tariffs against Europe over Greenland, calling them “unacceptable,” and even reportedly refused to join his proposed “Peace Board” for Gaza.
Asked about it Monday night, Trump told reporters: “Well, no one wants him because he’s leaving office very soon.” Trump then claimed that Macron was being hostile toward him, adding, “I will impose a 200% tariff on your wines and champagnes,” and perhaps then the French president would join the board.”
Trump’s latest threat triggered a wave of selling in shares of major publicly traded French wineries. Shares of LVMH, owner of brands such as Moët & Chandon and Dom Pérignon, fell almost 2.9% to 566 euros ($663), while those of Rémy Cointreau fell 2.4% to 38 euros ($44.50).
How did Europe respond to Trump’s threats?
European leaders, including Macron and British Prime Minister Keir Starmer, criticized the tariffs. Macron pressured the European Union to respond with a so-called trade bazooka using its most powerful tool of retaliation: the anti-coercion instrument.
If implemented, the EU could use it to attack important US services exports, which could especially hit US tech giants. However, the New York Times reported that some members of the bloc are still pushing for negotiation rather than retaliation.
An EU spokesperson told reporters: “Our priority is dialogue, not escalation… Sometimes the most responsible form of leadership is moderation.”
Tangent
On Tuesday, US Treasury Secretary Scott Bessent mocked the EU’s ability to mount a coordinated response against Trump’s latest tariff threat.
Bessent, who is in Davos to attend the World Economic Forum, told reporters: “I imagine they will first form the dreaded European working group, which seems to be their most powerful weapon.”
The Treasury secretary later said: “I am confident that the (European) leaders will not escalate the situation and that this will work out in a way that ends in a very good situation for everyone.”
This article was originally published in Forbes US
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