By Karin Strohecker, Dhara Ranasinghe and Samuel Indyk
LONDON, Jan 18 (Reuters) – Global markets are facing volatility after President Donald Trump vowed to slap tariffs on eight European nations until the U.S. is allowed to buy Greenland, news that pushed the euro to a seven-week low in late Sunday trading.
Trump said he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which will rise to 25% on June 1 if no deal is reached.
Major European Union states decried the tariff threats over Greenland as blackmail on Sunday. France proposed responding with a range of previously untested economic countermeasures.
As early trade kicked off in Asia-Pacific, the euro fell 0.2% to around $1.1572, its lowest since November. Sterling also dipped, while the yen firmed against the dollar.
“Hopes that the tariff situation has calmed down for this year have been dashed for now – and we find ourselves in the same situation as last spring,” said Berenberg chief economist Holger Schmieding.
Trump’s sweeping “Liberation Day” tariffs in April 2025 sent shockwaves through markets. Investors then largely looked past U.S. trade threats in the second half of the year, viewing them as noise and responding with relief as Trump made deals with Britain, the EU and others.
While that lull might be over, market moves on Monday could be dampened by the experience that investor sentiment had been more resilient than expected in 2025 and global economic growth stayed on track.
U.S. markets are closed on Monday for Martin Luther King Jr. Day, which means a delayed reaction on Wall Street.
The implications for the dollar were less clear. It remains a safe haven, but could also feel the impact of Washington being at the centre of geopolitical ruptures, as it did last April.
Bitcoin, a liquid proxy for risk that is open to trade at the weekend, was steady, last trading at $95,330.
Capital Economics said countries most exposed to increased U.S. tariffs were the UK and Germany, estimating that a 10% tariff could reduce GDP in those economies by around 0.1%, while a 25% tariff could knock 0.2–0.3% off output.
European stocks are near record highs. Germany’s DAX and London’s FTSE index are up more than 3% this month, outperforming the S&P 500, which is up 1.3%.
European defence shares will likely continue to benefit from geopolitical tensions. Defence stocks have jumped almost 15% this month, as the U.S. seizure of Venezuela’s Nicolas Maduro fuelled concerns about Greenland.
