EU vows ‘unflinching’ response as Trump’s Greenland push rattles markets

European Commission President Ursula von der Leyen on Tuesday vowed an “unflinching” response to US President Donald Trump’s escalating pressure over Greenland, warning that his tactics risked driving transatlantic ties into a “downward spiral”.

Speaking at the World Economic Forum in Davos, she said, “Plunging us into a downward spiral would only aid the very adversaries we are both so committed to keeping out of the strategic landscape. So our response will be unflinching, united and proportional.”

Her remarks landed after a volatile weekend in which Trump insisted that the US should control Greenland, a semi-autonomous territory of NATO member Denmark, and warned that European nations opposing the move would face new 10 per cent tariffs.

The comments triggered an immediate political reaction in European capitals and a sharp market sell-off in the US, with S&P 500 futures sliding 1.5 per cent and Nasdaq 100 contracts down 1.8 per cent early Tuesday in New York — the steepest futures drop since November. European stocks also tumbled, falling 1.3 per cent and headed for a second consecutive session of losses.

Asked by reporters in Davos what he would tell European leaders about Greenland, Trump replied, “I don’t think they’re going to push back too much. Look, we have to have it.” His campaign has linked Arctic control to broader geopolitical competition, while critics see a coercive attempt to redraw territory among allies.

Trump also framed the dispute in trade terms, threatening 10 per cent tariffs on the UK, Germany, Norway and France from 1 February, rising to 25 per cent in June should EU leaders rebuff Washington’s Greenland ambitions. Denmark and Greenland have repeatedly stated that the island is not for sale.

Von der Leyen criticised the tariff threats as destabilising for allies, saying, “The proposed additional tariffs are a mistake, especially between long-standing allies. In politics as in business — a deal is a deal. And when friends shake hands, it must mean something.”

EU officials have meanwhile weighed countermeasures, with several governments discussing emergency coordination to respond to what they regard as US economic coercion. Washington has warned that retaliatory tariffs would be “unwise”.

Financial analysts quoted in media reports said markets were reacting to geopolitical risk rather than economic fundamentals. “The market reaction is appropriate given the rapidly rising uncertainty,” said Michael O’Rourke, chief market strategist at JonesTrading. “The thought of forcibly coercing an ally to yield sovereign territory will incur geopolitical damage that will take years to repair.”

He added that if tariffs were activated or the US attempted an illegal annexation, the sell-off “should be much more severe”, pointing to an 11 per cent drop over three days during a previous tariff shock in April.

For Brussels, the dispute underscores a widening Arctic security agenda. Von der Leyen said the Commission is preparing a package “to support Arctic security” and planning a “massive European investment surge in Greenland” intended to strengthen local infrastructure and economic resilience. She also indicated that Europe’s upcoming defence spending push could include “a European icebreaker capability and other equipment vital to the Arctic security,” while signalling readiness to work with the US and other partners on shared Arctic objectives — albeit without conceding on Greenland’s status.

With Trump due to address the Davos gathering on Wednesday and European leaders coordinating their response, diplomats expect both the Greenland question and the tariff threat to dominate transatlantic discussions this week — with markets signalling that the fallout is already global.