Trump Drops Tariff Threat, Announces Greenland Deal ‘Framework’

NATO Secretary General Mark Rutte and President Trump at Davos
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Wednesday! President Trump today backed off his tariff threats to European countries as he said a 'framework' for a future deal on Greenland had been reached during talks at the World Economic Forum in Davos. Here at home, the House will try to wrap up work on the remaining 2026 government funding bills - including a contentious measure covering the Department of Homeland Security - before it heads out for a recess at the end of the week. Here's your evening update.

Trump Drops Tariff Threat Over Greenland, Announces 'Framework' for a Deal

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.

Congress Strikes a Healthcare Deal, but Not on ACA Subsidies

Congressional lawmakers announced Tuesday that they have reached a bipartisan agreement on a group of healthcare policies that includes a crackdown on middlemen in the drug industry.

The policies will be included in the bill funding the Department of Health and Human Services, which is expected to be brought up for a vote in the House this week as part of a minibus package. The HHS bill provides $116.8 billion for the department in fiscal year 2026, a slight increase from a year earlier and $33 billion more than the White House requested.

As STAT News's John Wilkerson and Daniel Payne report, the bill rejects some of the more radical changes the Trump administration was seeking, including a reorganization of the National Institutes of Health, slashing the budget of the Centers for Disease Control and Prevention, and creating a new agency called the Administration for a Healthy America. The Centers for Disease Control and Prevention is set to receive the same funding as last year, $9.1 billion, rather than the $4 billion cut the Trump administration was seeking. And the bill does nothing to expand health savings accounts, as President Trump has proposed. Nor does it provide enhanced Obamacare subsidies.

The policies in the bill include new restrictions on pharmacy benefit managers, middlemen known as PBMs. Among other things, the bill would require PBMs to pass all rebates through to insurers and to provide reasonable terms for pharmacies seeking to participate in their networks.

Democrats won a major concession in the bill, which will raise spending on community health centers to $4.6 billion in new 2026 fiscal year - a win that could be a problem for fiscal conservatives in the House. The legislation also permits Medicare to cover the cost of certain early detection screening tests for cancer.

The American Medical Association issued a statement expressing support for the agreement, saying it incorporates some elements of its agenda. "The AMA commends congressional leaders for finding common ground," Dr. David H. Aizuss, chair of the AMA Board of Trustees, said. "These proposals will benefit our patients in their everyday encounters with physicians."

Most House Democrats Will Oppose DHS Funding Bill

House Democratic leaders said in a closed-door meeting Wednesday that they plan to vote against a bill funding the Department of Homeland Security over concerns that it does too little to rein in Immigration and Customs Enforcement amid aggressive and at times violent enforcement actions by the agency in Minneapolis and elsewhere in the country.

After Minority Leader Hakeem Jeffries, Whip Katherine Clark and House Democratic Caucus Chair Pete Aguilar came out against the bill, most House Democrats are expected to follow suit, though a handful said they would support the measure.

"We'll be voting no unless there are any substantive changes or amendments," Aguilar told reporters. "In the last 24 hours, we've heard our members speak loudly that ICE isn't doing enough, these reforms aren't doing enough. This lawlessness has to stop."

Rep. Henry Cuellar, who helped negotiate the legislation, said he understood his fellow Democrats' concerns about ICE's behavior, but noted that the bill includes modest reforms, including $20 million for body cameras for ICE personnel and rules limiting the transfer of funds between federal agencies. The bill also cuts funding for ICE removal operations by $115 million and reduces the number of beds in detention centers by 5,500.

"I'd rather have some provisions and no provisions at all," Cuellar said. "The alternative would be a blank check, and I don't want to give them a blank check."

Teeing up the vote: The House is set to vote on four spending bills Thursday, covering the departments of Defense, Health and Human Services, Labor, Housing and Urban Development, Transportation, Education and Homeland Security. DHS is expected to receive separate consideration, reducing the odds that a showdown over ICE funding can sink the larger spending package. It looks like there will be enough Republican support to carry the DHS bill, though some lawmakers have been absent recently, potentially producing a close vote.

Assuming those four bills pass, the House plans to bundle them with two other spending bills that have already passed, covering Financial Services and State-Foreign Operations. The six-bill package would then be sent to the Senate, giving the upper chamber next week to approve them in time to avoid a shutdown at the end of the month.

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