Markets Slide as Trump Revives Trade War Fears Tied to Greenland

Global markets sold off sharply Tuesday after Donald Trump reignited fears of a widening trade war, tying new tariff threats to U.S. efforts to secure control of Greenland. The escalation sparked a broad “sell America” move, pressuring U.S. stocks and bonds while pushing safe-haven assets to record highs.

U.S. equities suffered their worst session since October. The S&P 500 fell about 2.1%, the Nasdaq Composite dropped more than 2.4%, and the Dow Jones Industrial Average slid roughly 870 points. The S&P 500’s decline erased its gains for the year, while the Nasdaq moved more than 1% lower for 2026.

The selloff wiped out an estimated $1.2 trillion in S&P 500 market value as investors reacted to Trump’s warning that seven European Union countries and the United Kingdom could face new tariffs unless they support U.S. control of Greenland, a semi-autonomous Danish territory. Asked how far he would go to secure the territory, Trump replied, “You’ll find out.”

Risk aversion spilled into fixed income. Investors sold U.S. Treasurys, sending yields sharply higher. The 10-year Treasury yield climbed to its highest level since August, while 30-year yields reached levels not seen since September—moves that typically translate into higher mortgage and consumer borrowing costs.

European markets also fell for a second consecutive day. Germany’s DAX dropped 1%, the U.K.’s FTSE 100 lost 0.7%, and Italy’s FTSE MIB slid 1.1%. The STOXX Europe 600 declined 0.7%, with most constituents ending lower. France’s CAC 40 fell around 0.7% after Trump threatened 200% tariffs on French wine and Champagne.

Volatility jumped as well. The CBOE Volatility Index rose to its highest level since mid-November. Meanwhile, safe-haven demand surged: gold jumped more than 2% to a new high, and silver extended gains after rising over 30% year to date. The ICE U.S. Dollar Index slid 0.8%, nearing its worst day since April.

Analysts described the move as a renewed “sell America” trade. Krishna Guha of Evercore ISI warned of severe and potentially lasting implications if the situation escalates, including for the dollar. Others noted the selloff may have been tempered by expectations that the Supreme Court could curb the administration’s tariff authority and that some threats may be walked back.

European officials said leaders will convene an emergency summit to consider retaliation, with more than $100 billion in counter-tariffs reportedly ready. Some have also signaled openness to deploying the bloc’s anti-coercion “trade bazooka.”

U.S. officials sought to calm markets. Treasury Secretary Scott Bessent urged restraint, calling criticism “hysterical” and insisting the U.S. remains a reliable partner. “Everyone take a deep breath,” he said. “Do not escalate.”

As investors weigh geopolitical risk against earnings and policy uncertainty, markets appear set for elevated volatility—particularly if tariff rhetoric hardens or retaliatory measures materialize.

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