The global stock markets are bracing for a turbulent start to the week as US President Donald Trump has threatened to impose fresh tariffs on eight European countries unless they support his ambitions to acquire Greenland. The proposed tariffs, which would start at 10% from 1 February and rise to 25% on 1 June, have sent shockwaves through the financial markets, with analysts warning of significant losses.
According to IG’s weekend market analysis, the FTSE 100 index in London is expected to fall by 0.9% when trading resumes on Monday, while the Dow Jones Industrial Average in the US is also on track for a 0.5% decline. The uncertainty surrounding these tariff threats has also fuelled a surge in demand for safe-haven assets, with gold prices trading 0.6% higher at $4,625 per ounce and silver up 0.5% at $90.41 per ounce.
European leaders, including UK Prime Minister Keir Starmer and European Commission President Ursula von der Leyen, have criticised Trump’s move, warning that it threatens to undermine the NATO defence alliance and disrupt last year’s trade agreements. Susannah Streeter, the chief investment strategist at Wealth Club, described the situation as a “migraine-inducing development” for policymakers, who will now have to navigate another layer of complex trade decisions.
The German engineering association, VDMA, has called on the European Commission to consider using its “anti-coercion instrument” against the US, warning that if the EU gives in to these demands, it will only encourage further “ludicrous” requests from the US president. Hildegard Müller, the president of the German auto industry association, has also warned that the costs of these additional tariffs would be “enormous” for German and European industry.
William Bain, the head of trade policy at the British Chambers of Commerce, has urged the UK government to prioritise the implementation of the UK-US economic prosperity deal, which was frozen last month, in order to reduce, rather than raise, tariffs and boost transatlantic trade.
As the global markets brace for the fallout from these latest tariff threats, the uncertainty and volatility are likely to persist, with investors closely monitoring the developments in the ongoing trade tensions between the US and its European allies.