President Trump backtracked Wednesday on his threat to impose tariffs on eight European countries after he said he had agreed with NATO Secretary General Mark Rutte on “the framework of a future deal” on Greenland and the Arctic region.
“This solution, if consummated, will be a great one for the United States of America, and all NATO Nations,” Trump wrote in a social media post announcing his abrupt turn on the European tariffs he threatened this past weekend.
Trump added that further talks are being held about plans for his Golden Dome missile defense program in Greenland and said that Vice President JD Vance, Secretary of State Marco Rubio, Special Envoy Steve Witkoff and others will handle the negotiations.
The president told reporters that the deal will deliver “everything we wanted, including especially real national security and international security.” He said more details will be released soon. He did not say that the United States would control Greenland.
‘We will remember’: Trump’s reversal followed a speech to the World Economic Forum in Davos, Switzerland, in which he said he would not use force to take over Greenland. Yet even as he eased some fears of military action, Trump also continued his push for control of the island.
“So we want a piece of ice for world protection, and they won't give it,” Trump complained. “So they have a choice. You can say yes and we will be very appreciative, or you can say no and we will remember.” (Trump referred to Greenland as Iceland multiple times during his 72-minute speech.)
Trump also took some potshots at U.S. friends and allies that left lingering questions about the future of NATO. “The problem with NATO is we’d be there for them 100% but I’m not sure they’d be there for us,” Trump said. Rutte pushed back on that point, offering a reminder that NATO’s Article 5, which says that an attack on one member is considered an attack on all, was triggered for the first and only time after the United States was attacked on 9/11.
A ’rupture in the world order’: Trump’s repeated scolding of European partners seemed to reinforce a message delivered at Davos a day earlier by Canadian Prime Minister Mark Carney: that we are seeing a rupture in the world order, not a transition. Carney’s tough speech, in which he never mentioned Trump by name but left no doubt that he was talking about the United States and its president, drew a standing ovation from the gathered dignitaries and corporate chieftains.
Trump used his speech to jab back at Carney. “They should be grateful to us, Canada,” Trump said. “Canada lives because of the United States. Remember that, Mark, the next time you make your statements.”
The European Union responded to Trump’s speech and tariff threat by suspending work on the U.S.-EU trade agreement announced last summer. “Our sovereignty and territorial integrity are at stake. Business as usual impossible,” Bernd Lange, a German official who heads the European Parliament’s international trade committee, wrote on social media.
In a statement, Lange indicated that implementation of the trade deal would be halted until the United States “decides to re-engage on a path of cooperation rather than confrontation.”
Trump appears to have switched paths hours later — but he may have started looking for an off ramp even earlier, particularly after markets responded to his tariff threats by resuming the so-called “Sell America” trade, sending bond yields rising and stocks tumbling Tuesday to their worst day since October. Stocks rebounded Wednesday after Trump said he wouldn’t use force to acquire Greenland, and they surged in the afternoon after he backed away from his tariff threat. The S&P 500 ended the day 1.2% higher, recovering about half its losses from Tuesday.
“President Trump is so unpredictable and he changes direction so quickly. The stock market no longer assumes that his pronouncements are going to be enforced,” Jed Ellerbroek, portfolio manager at Argent Capital Management, told CNBC. “The battle with Europe over Greenland would have taken the stock market down a lot more than the 2% yesterday if investors actually believed that this was a major geopolitical rift.”
What about the economy? Trump’s speech at Davos was originally framed as an economic one intended to promote the administration’s efforts on affordability, especially on housing. Trump did tout his trade policy and a drop in the U.S. trade deficit, and he called on Congress to ban large institutional investors from buying single-family homes and to cap credit card interest rates at 10% for one year. JPMorgan Chase CEO Jamie Dimon blasted the cap proposal Wednesday. He warned that it would cause “economic disaster” but suggested it could be tested in two states: Vermont and Massachusetts, home to liberal Sens. Bernie Sanders and Elizabeth Warren, both of whom back a rate cap.