Trump Ratchets Up Threats to Take Over Greenland, Shatter US Alliances

Good evening. President Trump today marked the one-year anniversary of his return to the White House by giving a meandering, marathon news conference in which he sought to defend ICE actions in Minnesota and tout his accomplishments over the past 365 days, albeit with scarcely a mention of his "One Big Beautiful Bill." Trump also aired plenty of grievances, rehashing familiar complaints and criticisms about a range of topics, including his own messaging operation - and plenty of potshots at former President Joe Biden, who left office 12 months ago.

Here's what's happening as we enter Year 2 of Trump 2.0.

Trump Ratchets Up Threats to Take Over Greenland, Shatter US Alliances

President Trump escalated his hyperaggressive push to have the United States take control of Greenland, sparking outrage among European allies and threatening to splinter the NATO alliance that has been a cornerstone of the global order for nearly 77 years.

Ahead of a scheduled speech to the World Economic Forum in Davos, Switzerland, on Wednesday, Trump told reporters today that he has a lot of meetings scheduled about Greenland and expressed optimism that the standoff will work out to everyone's benefit.

"I think things are going to work out pretty well, actually," Trump said during a lengthy and winding press briefing at the White House, later adding, "I think that we will work something out where NATO is going to be very happy and where we're going to be very happy, but we need [Greenland] for security purposes."

Asked how far he'll go to get Greenland, Trump responded: "You'll find out."

Trump's latest tariff threat: Greenland is a semi-autonomous territory of Denmark, which is a NATO ally. Trump's extraordinary pursuit of the Arctic island, including the possibility of acquiring it "the hard way," has inflamed tensions with longstanding European partners. Trump ratcheted up those tensions on Saturday by announcing that he will impose new 10% tariffs in February on eight European countries - Denmark, Finland, France, Germany, Norway, the Netherlands, Sweden and the United Kingdom - until a deal is reached for the United States to buy Greenland. He added that the tariffs would climb to 25% if no deal is reached by June 1.

European leaders quickly condemned Trump's tariff threat and set out to formulate a response and consider countermeasures, including the possible use of retaliatory tariffs and a so-called anti-coercion instrument, colloquially referred to as a "trade bazooka," that could curb or block U.S. access to European Union markets or impose export controls, among other measures.

Tense texts: In a weekend text message made public on Monday by the Norwegian government, Trump linked his push to take over Greenland to his being denied the Nobel Peace Prize. "Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace, although it will always be predominant, but can now think about what is good and proper for the United States of America," Trump wrote to Norway's prime minister, Jonas Gahr Støre. (Norway's government does not award the peace prize.)

Trump also questioned why Denmark controls Greenland before adding: "I have done more for NATO than any other person since its founding, and now, NATO should do something for the United States. The World is not secure unless we have Complete and Total Control of Greenland."

Trump on Tuesday followed up his tariff threat by publishing private text messages he received from French President Emmanuel Macron and NATO chief Mark Rutte. "I do not understand what you are doing on Greenland," Macron told Trump in one message. Rutte said he would use his media engagements in Davis to highlight Trump's work in Syria, Gaza and Ukraine before adding: "I am committed to finding a way forward on Greenland. Can't wait to see you."

Europe shifts away from US: European Commission President Ursula von der Leyen used her own speech at Davos to warn that Trump's threats are a "mistake" and that the two sides should abide by the trade deal they reached last July. "In politics as in business, a deal is a deal. And when friends shake hands, it must mean something," she said.

She added that fracturing the U.S.-European friendship "would only aid the very adversaries we are both so committed to keeping out of the strategic landscape. So our response will be unflinching, united and proportional."

Von der Leyen also reiterated that the sovereignty and integrity of Greenland and the Kingdom of Denmark are non-negotiable, even as Europe is willing to work with the United States on Arctic security - and is preparing its own security strategy as it looks to strengthen its ability to stand on its own in areas "from security to economy, from defense to democracy."

Congressional criticism: Some U.S. lawmakers also pushed back against Trump's tariff threat and his pursuit of Greenland.

"There is no need, or desire, for a costly acquisition or hostile military takeover of Greenland when our Danish and Greenlandic allies are eager to work with us on Arctic security, critical minerals and other priorities under the framework of long-standing treaties," Democratic Sen. Jeanne Shaheen and Republican Sen. Thom Tillis, the co-chairs of a bipartisan Senate NATO Observer Group, said in a weekend statement. "Continuing down this path is bad for America, bad for American businesses and bad for America's allies. This kind of rhetoric also further helps adversaries like Putin and Xi who want to see NATO divided. Our allies deserve better, and so do the American people who have made their opposition to this flawed policy resoundingly clear."

Markets also made their displeasure clear, with stocks suffering their worst losses since October and the dollar sliding against the euro. "The fact that the dollar is falling while the euro is rising on the crisis says global investors at the margin are looking to reduce or hedge their exposure to a volatile and unreliable US," Krishna Guha, vice chairman at Evercore ISI, said in a note cited by CNN.

At Davos, Treasury Secretary Scott Bessent urged calm and called on European leaders not to escalate against the United States. "Sit back, take a deep breath, do not retaliate, do not retaliate," he said. "The president will be here tomorrow and he will get his message across."

Europe's other leverage: Bessent reportedly also said he did not think European countries would retaliate against Trump's threats by selling off U.S. debt. He criticized media "hysteria" and dismissed a new report from Deutsche Bank that noted that Europe "owns a lot of treasuries."

"For all its military and economic strength, the US has one key weakness: it relies on others to pay its bills via large external deficits," Deutsche Bank analyst George Saravelos reportedly wrote. "Europe, on the other hand, is America's largest lender: European countries own $8tn of US bonds and equities, almost twice as much as the rest of the world combined. In an environment where the geoeconomic stability of the western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part."

What's next: The world will be watching Trump's big speech at Davos, and U.S. talks on the sidelines of the conference. European leaders are reportedly set to gather after Davos for an emergency discussion about transatlantic relations. Meanwhile, the Supreme Court is set to rule any day on the constitutionality of Trump's reciprocal tariffs, and the court decision could add another complication to the president's trade battles.

Americans Pay 96% of Trump's Tariffs: Analysis

U.S. companies and consumers have paid almost all of the cost of the tariffs imposed on imports by President Trump over the last year, according to a new analysis by researchers at the Kiel Institute for the World Economy in Germany.

The analysis, which strongly contradicts claims by Trump and his staff that foreign firms cover the cost of the tariffs, indicates that U.S. companies and consumers have paid 96% of the cost.

Researchers came to that conclusion after analyzing more than 25 million shipment records, representing an economic value of more than $4 trillion. Those imports generated about $200 billion in customs revenues - the tariff revenue surge that Trump has cited when promising refund checks to Americans, as well as a means to reduce the budget deficit and national debt.

But that revenue surge is coming largely out of American pockets. The researchers found that import prices fell by only 4% after the tariffs were imposed, indicating that foreign firms were absorbing about 4% of the higher cost. That leaves U.S. firms and consumers swallowing the other 96%.

To test their conclusions, the researchers also looked specifically at imports from Brazil following Trump's imposition of a 50% tariff and India following Trump's imposition of a tariff ranging from 25% to 50%. In both cases, the prices of goods remained the same, even as trade volumes fell by 18% to 24%. Since prices didn't budge, the researchers conclude that all of the higher cost imposed by the tariffs was paid on the U.S. side of the ledger.

Implications of the analysis: The researchers say the analysis clearly shows that tariffs are a tax on American consumers. As a domestic tax, they do not transfer wealth from foreigners to Americans but instead transfer wealth from U.S. companies and consumers to the U.S. Treasury. The main adjustment to the tariffs occurs through trade volumes, which fall as the tariffs raise prices. Those more costly goods then work their way through the U.S. supply chain, raising prices for domestic producers and end users.

"The tariffs are an own goal," said co-author Julian Hinz, Research Director at the Kiel Institute, using a soccer term that refers to mistakenly scoring points for the opposing team. "The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill."

The bottom line: "Foreign exporters did not meaningfully reduce their prices in response to U.S. tariff increases," the report concludes. "The $200 billion surge in customs revenue represents $200 billion extracted from American businesses and households."

Congress Releases $1.2 Trillion Package to Fund Government

Having reached an agreement on the remaining bills that would fund the government ahead of a January 30 shutdown deadline, Congressional negotiators on Tuesday released a 1,059-page bipartisan "minibus" that covers the Pentagon and the Departments of Labor, Health and Human Services and Homeland Security.

While the release of the $1.2 trillion package reduces the odds of a shutdown at the end of the month, the legislation includes funding for Immigration and Customs Enforcement, which could become a flashpoint as lawmakers battle over the agency's historically aggressive enforcement actions and the recent killing by an ICE officer of Renee Nicole Good, a 37-year-old U.S. citizen, in Minneapolis.

Some Democrats are threatening to reject any legislation that fails to rein in ICE. The package "leaves in place an additional $18 billion a year for ICE, tripling the budget," Rep. Ro Khanna said. "It is a surrender to Trump's lawlessness. I will be a strong no and help lead the opposition to it."

Rep. Ted Lieu, another California Democrat, said last week that he wants to see reforms for ICE in the spending legislation. "And if there aren't reforms, I'm going to be a hard no on that bill, the DHS bill," he said.

Democrats' options are limited, though, since the major boost to ICE came last summer, when Republicans gave the agency an additional $75 billion to dramatically expand its capacities.

Connecticut Rep. Rosa DeLauro, the senior Democrat on the House Appropriations Committee, said she supports the spending package, noting that it also includes essential funding for agencies including the Coast Guard, the Federal Emergency Management Agency and the Transportation Security Administration.

"I understand that many of my Democratic colleagues may be dissatisfied with any bill that funds ICE," she said in a statement. "I share their frustration with the out-of-control agency. I encourage my colleagues to review the bill and determine what is best for their constituents and communities."

What comes next: The House is expected to vote on its final spending package by the end of the week, with the controversial Homeland Security funding measure potentially receiving separate consideration. If successful, the Senate would then have several days to approve the six bills it needs to pass to avoid a shutdown at month's end.

Fiscal News Roundup

• Trump's Greenland Threats Spark Outrage and Defiance From EU, Testing Longtime NATO Alliances – Associated Press
• Trump Heckles Europe Before Heading to Davos – New York Times
• Diplomacy or Retaliation? The EU Mulls Its Options as Tensions With U.S. Rise Over Greenland – Associated Press
• Trump Hints at Alternate Tactics to Acquire Greenland if Courts Block His Ability to Use Tariffs – CNN
• Greenland PM Tells People to Prepare for Possible Invasion – Bloomberg
• Dow Tumbles More Than 850 Points and Dollar Slides Over Greenland and Tariff Threats – CNN
• Danish Pension Fund to Sell $100 Million in Treasuries, Citing 'Poor' U.S. Government Finances – CNBC
• Surrounded by Billionaires in Davos, Trump Plans to Lay Out How He'll Make Housing More Affordable – Associated Press
• Congress Releases Massive Funding Bill Ahead of Shutdown Deadline as ICE Clash Looms – NBC News
• Massie Rips Trump's Sale of Venezuelan Oil 'for His Own Piggy Bank' – The Hill
• Trump's IRS Chief Reorganizes Tax Agency Days Before Filing Season – Washington Post
• Trump Has Largely Fallen Short on Economic Promises, Stats Show – USA Today
• Trump Administration Concedes DOGE Team May Have Misused Social Security Data – Politico
• Trump's Pardons Forgive Financial Crimes That Came With Hundreds of Millions in Punishments – NBC News

Views and Analysis

• Trump's First Year Could Have Lasting Economic Consequences – Ben Casselman, New York Times
• Trump's ICE Force Is Sweeping America. Billions in His Tax and Spending Cuts Bill Are Paying for It – Lisa Mascaro, Associated Press
• Why the Trump Administration Is Going to Davos – Howard Lutnick, Financial Times
• Trump Is the Ultimate Davos Man – Michael B.G. Froman, New York Times
• With Threats to Greenland, Trump Sets America on the Road to Conquest – Peter Baker, New York Times
• 5 Key Points on Trump's Greenland Push – Aaron Blake, CNN
• Trump Has Tariffs. Europe Has a 'Trade Bazooka.' This Greenland Standoff Could Get Ugly, Fast – Auzinea Bacon, CNN
• Trump's Greenland Tariff Threats Could Be Upended by Supreme Court Decision – Lori Ann LaRoco, CNBC
• America's Barbarians-Inside-the-Gates Turn – Edward Luce, Financial Times
• Greenland Isn't as Big as It Looks in 'Risk' – John Authers, Bloomberg
• Grocery Price Inflation Is Picking up, Defying Trump's Claims. Here's Why – Max Zahn, ABC News
• There's Much More at Stake in the Fed Case Than Interest Rates – Lev Menand, New York Times
• Powell's Best Efforts Can't Save the Fed's Independence – Clive Crook, Bloomberg
• How Trump Doomed the American Auto Industry – Ryan Cooper, American Prospect
• How Trump Has Pocketed $1,408,500,000 – New York Times Editorial Board
• Falsehoods Fueled Trump's First Year Back in Office – Linda Qiu, New York Times
• Executive Orders, Pardons and Golf: Trump's First Year of His Second Term by the Numbers – Sarah Dean and Megan Shannon, NBC News