The stock market attacks Trump in Greenland in an allied way
DAVOS, Switzerland (AP) — Investors appeared to have conveyed to President Donald Trump the risk his designs pose to Greenland with a message he didn’t hear from European leaders: Threatening allies with tariffs and land seizures isn’t exactly the kind of policy that builds confidence in the global economy.
Trump on Wednesday backtracked on his threat to impose tariffs on eight European allies for opposing his insistence on acquiring Greenland from Denmark, his former ally, after the plan spooked Wall Street by sparking serious talks within NATO about a fundamental break from the transatlantic military alliance that has been a linchpin of post-World War II security.
Markets had seen their biggest losses since October as Trump prepared to travel to Davos, Switzerland, to deliver a keynote address to world leaders and elite at the World Economic Forum.
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Trump complained with some annoyance during the speech about what he called a stock market “crash,” complaining that the market gyrations occurred even though the United States “gave NATO and European nations billions and billions of dollars in defense.”
But during that speech, he made his first abrupt change of position of the day: He took the option of using military force to seize Greenland off the table.
“I’m not doing that. Okay?” Trump said to the packed conference room.
Then, hours later, Trump announced he would withdraw from the tariffs entirely after saying he had reached an agreement with NATO Secretary General Mark Rutte on a “framework” for Greenland that “gives us everything we needed” if the deal is consummated.
Trump rushed on CNBC just before trading ended for the day on Wall Street, boasting that the framework was going to “be a very good deal for the United States” and its allies.
He downplayed the role the nervous market played in his decision on tariffs. “No, we took it down because it seems like we have a pretty clear concept of what an agreement is,” Trump said.
Trump did not offer details on the terms of that framework. But the S&P 500 rallied 1.2% after his comments, regaining about half the ground it had lost a day earlier. The Dow Jones Industrial Average also rose 1.2%, as did the Nasdaq Composite.
A concept of treatment, without many details.
After the withdrawal, Danish Foreign Minister Lars Løkke Rasmussen cautiously stated that “the day is ending on a better note than it started,” but said the details of the deal still need to be worked out.
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One idea that NATO members have discussed as part of the compromise would be for Denmark and the alliance to work with the United States to build more American bases in Greenland, according to a European official familiar with the matter but not authorized to comment publicly. The official said it was not immediately clear whether that idea was included in the contours of the framework that Trump and Rutte discussed on the sidelines of Davos on Wednesday.
Rutte, in an appearance on News Wednesday night, gave few indications about what exactly he and Trump agreed to.
“We agreed that he is right, and he is right that we have to collectively protect the Arctic regions,” Rutte said. “But also, of course, the United States continues its conversations with Greenland and Denmark about how we can make sure that the Russians and China do not gain access to Greenland’s economy or military sense.”
It wasn’t just the financial markets that were telling Trump to reconsider the tariffs and harsh rhetoric toward allies.
Several U.S. officials were also concerned about Trump’s hardline stance and bellicose language toward Greenland, Denmark and other NATO allies because they feared it could harm other foreign policy goals.
These officials thought the fixation on Greenland and Trump’s earlier comments suggesting that the possible fragmentation of NATO was a cost he might be willing to pay were complicating the president’s effort to form the Peace Board, which he is expected to highlight Thursday in Davos. The U.S. officials spoke on condition of anonymity to discuss concerns emerging within the administration.
Many European countries, already skeptical about the proposed board’s broad global mandate, had reacted even more negatively to the concept after Trump’s tariff threat. The board, born from Trump’s 20-point plan to end the war between Israel and Hamas, was initially conceived as a small group of world leaders who would oversee the ceasefire in Gaza, but has morphed into something much more ambitious.
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“The interpretation that European leaders are going to make of this is that standing up and being firm defused the crisis,” said Max Bergmann, director of the Europe, Russia and Eurasia Program at the Center for Strategic and International Studies. “Trump is acting like a bully and the only way we will have a stable relationship is if we back off.”
But Matthew Kroenig, vice president and senior director of the Scowcroft Center for Strategy and Security at the Atlantic Council, responded that the idea that Trump would seize Greenland seemed more like a hoax from the beginning, and that it may have worked.
“Most of the world was freaking out about these threats,” Kroenig said. But he noted that this style of negotiation has some disadvantages.
On the one hand, it led the prime minister of Canada, a close ally of the United States, to propose that smaller countries unite against aggressive superpowers.
“It has been unnecessarily dramatic, costly and damaging, but all the damage so far is repairable,” added Daniel Fried, former US ambassador to Poland and now a distinguished fellow at the Atlantic Council in Washington.
Fried noted that that possibility would be more difficult to achieve if Trump had continued on the path with Greenland where he appeared to be heading.
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AP writers Stan Choe in New York and Matthew Lee in Washington contributed reporting.