President Donald Trump appears to have found ‘solution’ to Greenland problem crisis after talks with NATO leaders on Wednesday. He said he would drop his threat to impose 10% tariffs on eight European allies – a statement that sparked a backlash. massive sell-off Tuesday – originally scheduled to take effect on February 1st.
The shift came just hours after Trump walked back his previous threat to use force to protect Greenland during a speech at the World Economic Forum in Davos, Switzerland.
“We have developed a framework for a future agreement on Greenland and the entire Arctic,” Trump said. wrote The Truth Society magazine added that the plan would be “a great plan for the United States of America and all NATO countries.” He said the tariffs would be put on hold “based on that understanding.”
The announcement was made after a meeting with NATO Secretary-General Mark Rutte. Rutte has been seeking to ease growing tensions between Washington and its European allies as Trump escalates rhetoric about Greenland’s strategic importance. Trump also said on “Truth Social” that more discussions are underway about what he called the “Golden Dome” initiative related to Greenland, but did not provide details.
Markets reacted strongly to the apparent de-escalation. The S&P 500 rose 1.5% in the afternoon, while long-term Treasury yields fell, indicating investors were breathing a sigh of relief after several days of volatility. While this pullback may confirm yet another instance of “TACO trade” or “Trump always cringes,” significant questions remain about the substance of the framework.
Trump has repeatedly said anything that doesn’t control the entirety of Greenland is “unacceptable”. Given Denmark’s reiteration after Trump’s speech on Wednesday that it would not relinquish Greenland sovereignty, it is unclear, and seems unlikely, whether the outline for discussion with NATO leadership meets this particular condition.
Trump said in the Truth Society post that Vice President Vance, Secretary of State Marco Rubio and Special Envoy Steve Witkoff will lead follow-up negotiations and report directly to him. The news also comes after the European Union suspended trade talks with the United States and suspended a trade agreement agreed since August. In a statement, CATO scholar Kyle Handley wealthwrote that the suspension should never be seen as a “dramatic defeat” because “there was no real deal from the beginning”.
“What is unraveling now is a series of flimsy, politically convenient press releases that mask fundamental differences and are always vulnerable to the threat of tariffs at the executive level.”