In a move that has sent shockwaves through the global financial markets, US President Donald Trump has threatened to impose tariffs of up to 25% on eight European countries, including the UK, unless they allow the US to purchase Greenland. This announcement has led to a decline in stock markets across Europe, with the FTSE 100 falling by 0.4%, France’s CAC 40 dropping by 1.6%, and Germany’s DAX decreasing by 1.4%.
The proposed tariffs, which would be implemented on any and all goods sent to the United States starting on 1 February, with a potential increase to 25% by 1 June, have prompted a swift reaction from the UK government. Chancellor Rachel Reeves has withdrawn from a planned appearance at the London Stock Exchange, where the event was intended to celebrate a “new golden age” for the City following the FTSE 100’s rise above the 10,000 mark for the first time.
Instead, Reeves attended a press conference with Prime Minister Keir Starmer, where the Prime Minister emphasised the need for “calm discussion between allies” to resolve the dispute over Greenland. The Treasury confirmed Reeves’ withdrawal from the stock exchange event, which went ahead without her, with the LSE’s chief executive, Julia Hoggett, taking the lead.
Analysts at Deutsche Bank have warned that the tariff threats, if implemented, would be “economically and geopolitically damaging.” However, they also note that the initial tariffs announced on “liberation day” were ultimately softened a week later, suggesting that there may be room for negotiation.
The impact of these developments has been felt across the financial markets, with safe-haven assets such as gold and silver reaching record highs as investors seek to protect their portfolios. The US markets will be closed on Monday for the Martin Luther King Jr. Day holiday, but the fallout from Trump’s tariff threats is likely to continue to dominate the headlines in the days and weeks to come.