The dollar and Wall Street stocks fell on Tuesday after Donald Trump said he “will not back down” from his campaign to take control of Greenland even as he offered talks on the issue that has pitted the US and its European allies at face-off.
The U.S. currency fell 0.8 percent against the euro, while the S&P 500 was down 1.6 percent amid rising transatlantic tensions and trade war threats. The tech-focused Nasdaq Composite index was down 1.8 percent.
European shares also fell on Tuesday, with the Stoxx Europe 600 closing 0.7 percent lower.
Trump said in a post on his Truth social platform earlier in the day that he had “agreed to a cross-party meeting in Davos, Switzerland,” where he will attend the World Economic Forum this week.
But, despite a “very good” conversation with NATO Secretary General Mark Rutte, the US President said he “cannot back down” from his plan to seize Greenland.
He posted an AI-generated image of himself, Vice President JD Vance and Secretary of State Marco Rubio on a giant Arctic island with an American flag and a sign reading: “US TERRITORIES EST 2026”.
Denmark has sent a “substantial contribution” of troops and its army chief to the autonomous region this week, in addition to the more than 200 troops already there.
Danish Prime Minister Mette Frederiksen said on Tuesday that her country needs to “stand strong and show what we are made of” even if it is “threatened by our closest ally”.
Trump’s recent threat to impose 10 percent tariffs on eight European states that send military personnel to Greenland has raised fears of a trade war, putting transatlantic relations in jeopardy.
European Commission President Ursula von der Leyen said in Davos that Brussels would respond to US pressure in a “decisive, united and proportionate” manner.
He said that “the seismic change we are going through today” made it necessary to “build a new form of European freedom”, suggesting that Trump had put the US-EU trade deal agreed last year into question.
The European Parliament suspended ratification of the trade deal on Tuesday and the EU is likely to impose tit-for-tat tariffs if Trump follows through on his threats.
Belgian Prime Minister Bart de Wever said the idea of ”appeasing” Trump had “reached its breaking point”, as he urged the bloc to “drop its bluff now”. Referring to Europe’s relations with the Americas, he said: “It is one thing to live as a happy vassal, quite another to live as an unhappy slave.”
But speaking at the World Economic Forum, US Treasury Secretary Scott Besant urged America’s trading partners to “take a deep breath and let things unfold”, adding that “the worst thing countries can do is move against America”.
He stressed US support for NATO, saying “Europe is of course an ally”.
Trump also accused Britain of “big stupidity” over plans to transfer ownership of the Chagos Islands, including the US air base at Diego Garcia, to Mauritius. He described the move as “another reason in a very long series of national security reasons why Greenland has to be acquired”.
The US president posted messages from Emmanuel Macron, in which the French president said: “I don’t understand what you’re doing on Greenland.”
