Trump's Greenland threats spark outrage and defiance from EU, testing longtime NATO alliances

DAVOS, Switzerland (AP) — President Donald Trump ’s pledge to provoke a sweeping tariff fight with Europe to get his way in taking control of Greenland has left many of America’s closest allies warning of a rupture with Washington that would shatter the NATO alliance that had once seemed unshakable.

The European Union’s top official on Tuesday called Trump’s planned new tariffs over Greenland a “mistake” and questioned Trump's trustworthiness. French President Emmanuel Macron said the EU could retaliate against its long-standing ally by deploying one of its most powerful economic tools, known colloquially as a trade “bazooka.”

Trump prides himself on ratcheting up pressure to try and negotiate through a position of strength. He is slated to leave on Tuesday — the anniversary of his inauguration — for the World Economic Forum in Davos, Switzerland, a venue that could give him the chance to defuse tensions as quickly as he has sought to stir them up.

But European leaders — digging in and vowing to defend Denmark and its semiautonomous control over Greenland — may be seeking just as hard to meet an extraordinary moment with their own demonstration of fierce resolve.

That could hurt the chances of Trump finding a quick way to turn around the crisis. And, even as the furor over Trump's escalating calls for U.S. control of the vast Arctic island seems ready to engulf the elite annual meeting in Switzerland, Greenland's leader insisted on respect for its territorial integrity and said recognition of international law is “not a game.”

European Commission President Ursula von der Leyen pushed back against Trump's announcement that, starting February, a 10% import tax will be imposed on goods from eight European nations that have rallied around NATO ally Denmark. Greenland is a semiautonomous territory of Denmark.

“The European Union and the United States have agreed to a trade deal last July,” von der Leyen said in Davos. “And in politics as in business – a deal is a deal. And when friends shake hands, it must mean something.”

“We consider the people of the United States not just our allies, but our friends. And plunging us into a downward spiral would only aid the very adversaries we are both so committed to keeping out of the strategic landscape,” she added.

She vowed that the EU’s response “will be unflinching, united and proportional.”

The harder stance seemed to defy the approach that many European leaders have taken since Trump returned to office, which mostly had been to say nice things about Trump to try to stay in his good graces, while working furiously through other avenues to find compromise. The president's continued insistence in recent weeks, however, that nothing short of the U.S. somehow owning Greenland being unacceptable, is testing the limits of the softer approach.

Trump says the U.S. needs the territory to deter possible threats from China and Russia. Set to speak in Davos on Wednesday, Trump said on social media that he had agreed to “a meeting of the various parties” there. U.S. Treasury Secretary Scott Bessent insisted, meanwhile, that America’s relations with Europe “have never been closer” and urged trading partners to “take a deep breath.”

Still, Danish Prime Minister Mette Frederiksen, speaking in the Danish parliament, said that “the worst may still be ahead of us.” She said that “we have never sought conflict. We have consistently sought cooperation.”

Greenland's Prime Minister Jens-Frederik Nielsen said at a news conference in the island's capital, Nuuk, that “we need to have respect for international law and territorial integrity.” He said those principles should unite Western democratic countries, and said he was grateful for support from EU allies.

“International law, it's not a game,” he said. “We have been a close and loyal ally to the United States, to NATO, through many, many, many years. We can do lots more in that framework. We are willing to cooperate much more, but of course in mutual respect, and if we cannot see that, it will be very difficult to have a good and reliable partnership.”

Trump's threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.

Unofficially known as the “trade bazooka,” the anti-coercion instrument could sanction individuals or institutions found to be putting undue pressure on the EU. The EU has two other major economic tools it could use to pressure Washington: new tariffs, or a suspension of the U.S.-EU trade deal.

Macron warned in Davos that the additional tariffs could force the EU to use its anti-coercion mechanism for the first time against the United States.

“Can you imagine that?” he said, arguing that allied countries should be focusing instead on bringing peace to Ukraine. “This is crazy.”

In general, he said, the mechanism “is a powerful instrument and we should not hesitate to deploy it in today’s tough environment.”

Trump earlier posted a text message from Macron in which the French president suggested a meeting of members of the Group of Seven industrialized democracies in Paris after the Davos gathering. An official close to Macron, who spoke anonymously in line with the French presidency's customary practices, confirmed the message shared by Trump is genuine.

In his latest threat of tariffs, Trump indicated that the import taxes would be retaliation for last week’s deployment of symbolic numbers of troops from the European countries to Greenland — though he also suggested that he was using the tariffs as leverage to negotiate with Denmark.

Speaking on the sidelines of Davos, California Gov. Gavin Newsom slammed Europe’s response to Trump's tariff threats as “pathetic” and “embarrassing,” and urged European leaders to unite and stand up to the United States.

“It is time to get serious, and stop being complicit,” Newsom told reporters. “It’s time to stand tall and firm, have a backbone.”

Greenland’s European backers have also looked at establishing a more permanent military presence to help guarantee security in the Arctic region, a key demand of the United States, Swedish Defense Minister Pål Jonson said.

In Moscow, meanwhile, Russian Foreign Minister Sergey Lavrov strongly denied any intention by Russia and China to threaten Greenland, while also describing Greenland as a “colonial gain” for Denmark. At a news conference, he said that “in principle, Greenland isn’t a natural part of Denmark.”

In another sign of tension between allies, the British government on Tuesday defended its decision to hand sovereignty of the Chagos Islands to Mauritius after Trump attacked the plan, which his administration previously supported.

Trump said that relinquishing the remote Indian Ocean archipelago, home to a strategically important American naval and bomber base, was an act of stupidity that shows why he needs to take over Greenland.

In a speech to lawmakers at Britain's Parliament on Tuesday, U.S. House of Representatives Speaker Mike Johnson said he hoped to “calm the waters” as Trump roils the trans-Atlantic relationship with his desire to take over Greenland.

Johnson said the U.S. and the U.K. “have always been able to work through our differences calmly, as friends. We will continue to do that.”

Burrows reported from Nuuk, Greenland. Weissert reported from Washington. AP writers Sylvie Corbet in Paris, Jill Lawless in London and Lorne Cook in Brussels contributed to this report.

President Donald Trump listens to a question from a reporter during a press briefing at the White House in Washington, Tuesday, Jan. 20, 2026. (AP Photo/Mark Schiefelbein)

French President Emmanuel Macron is seen during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Tuesday, Jan. 20, 2026. (AP Photo/Markus Schreiber)

President Donald Trump speaks with reporters after arriving at Palm Beach International Airport, Monday, Jan. 19, 2026, in West Palm Beach, Fla. (AP Photo/Julia Demaree Nikhinson)

People walk at the Promenade in front of the Congress Center where the Annual Meeting of the World Economy Forum take place in Davos, Switzerland, Monday, Jan. 19, 2026. (AP Photo/Markus Schreiber)

President of the European Commission Ursula von der Leyen talks during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Tuesday, Jan. 20, 2026. (AP Photo/Markus Schreiber)

Danish soldiers land at Nuuk airport, Monday, Jan. 19, 2026. (Mads Claus Rasmussen/Ritzau Scanpix via AP)

President of the European Commission Ursula von der Leyen talks during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Tuesday, Jan. 20, 2026. (AP Photo/Markus Schreiber)

Riot police clash with protesters after a rally against the World Economic Forum in Davos and the visit of US President Donald Trump, on Monday, in Zurich, Switzerland, Jan. 19, 2026. (Michael Buholzer/Keystone via AP)

A fisherman navigates past ice in the sea off the coast of Nuuk, Greenland, Monday, Jan. 19, 2026. (AP Photo/Evgeniy Maloletka)

European Union foreign policy chief Kaja Kallas, center, greets Minister for Foreign Affairs and Research of Greenland Vivian Motzfeldt, right, and Denmark's Defense Minister Troels Lund Poulsen, left, prior to a meeting at EU headquarters in Brussels, Monday, Jan. 19, 2026. (AP Photo/Geert Vanden Wijngaert)

People protest against Trump's policy towards Greenland in front of the US consulate in Nuuk, Greenland, Saturday, Jan. 17, 2026. (AP Photo/Evgeniy Maloletka)

Scott Bessent, US Secretary of the Treasury, holds a speech at the USA House during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Tuesday, Jan. 20, 2026. (AP Photo/Markus Schreiber)

NEW YORK (AP) — Stocks sank on Wall Street after President Donald Trump threatened to hit eight European countries with new tariffs as tensions escalate over his attempts to assert American control over Greenland. The S&P 500 fell 2.1% Tuesday, its biggest drop since October. Technology stocks were the biggest weights. The Dow Jones Industrial Average dropped 1.8%. The Nasdaq composite slumped 2.4%. Trump said Saturday that he would charge a 10% import tax starting in February on goods from the eight European nations. European markets also fell, while gold prices surged. Long-term Treasury yields rose in the bond market.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Stocks slumped in afternoon trading on Wall Street Tuesday after President Donald Trump threatened to hit eight NATO members with new tariffs as tensions escalate over his attempts to assert American control over Greenland.

The S&P 500 fell 2%, pulling back further from the record it set early last week. It was the first time U.S. markets could react to the escalation from Trump, as they were closed on Monday for Martin Luther King Jr. Day.

The Dow Jones Industrial Average fell 877 points, or 1.8%, as of 2:46 p.m. Eastern. The Nasdaq composite slumped 2.3%.

The losses were widespread and led by technology stocks, many of which already have more influence over the direction of the market because of outsized values. Retailers, banks and industrial companies also fell sharply.

Nvidia, one of the most valuable companies in the world, plunged 3.6%. Amazon fell 3.7%, JPMorgan Chase fell 2.9%, and Caterpillar lost 3%.

Companies that focus on consumer staples held up better than most of the market. Colgate-Palmolive rose 1.5% and Campbell's rose 1.7%.

The price of U.S. crude oil rose 1.5% to $60.34 per barrel. The price of Brent crude, the international standard, rose 1.3% to $64.76.

European markets and markets in Asia fell.

Trump said Saturday that he would charge a 10% import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland. The annual combined imports from European Union nations are greater than those from the top two biggest individual importers into the U.S., Mexico and China.

Gold prices surged 3.7% and silver prices soared 6.9%. Both reached for records. Such assets are often considered safe havens in times of geopolitical turmoil.

The trade tensions apparently short-circuited a recent rally in bitcoin. The cryptocurrency rose above $96,000 late last week but has dropped back to around $89,300.

Treasury yields were mixed in the bond market. The yield on the 10-year Treasury rose to 4.29% from 4.23% late Friday. The yield on the two-year Treasury slipped to 3.59% from 3.60% late Friday.

Trump linked his aggressive stance on Greenland to last year’s decision not to award him the Nobel Peace Prize, telling Norway’s prime minister that he no longer felt “an obligation to think purely of Peace,” in a text message released Monday.

Trump’s message to Jonas Gahr Støre appeared to ratchet up a standoff between Washington and its closest allies over his threats to take over Greenland, a self-governing territory of NATO member Denmark.

Trump's threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.

The trade and political conflict with Europe is heating up just as world leaders meet at the World Economic Forum annual meeting in Davos, Switzerland this week. Wedbush Securities analyst Dan Ives said the new tariff threat “is clearly an overhang on the conference,” but that it would likely simmer over time.

“Our view is just like over the last year the bark will be worse than the bite on this issue and tariff threats as negotiations take place and tensions ultimately calm down between Trump and EU leaders,” Ives wrote in a note to clients.

Tariffs have been looming over the U.S. and global economies since 2024. Trump's tariff policy has been confusing and uncertain, involving the threat or implementation of tariffs and then often followed by delays or cancellations. Existing tariffs have added more pressure to already high prices on goods and the threat of more to come makes it difficult for businesses to plan ahead.

The threat of tariffs reigniting already high inflation could further complicate the Federal Reserve's job. The central bank cut its benchmark interest rate three times late in 2025 to help bolster the economy as the job market weakened. But, it has taken a more cautious view because of the risk of rising inflation, which remains above the Fed's target of 2%.

Lower interest rates on loans can help bolster economic activity, but they could also fuel inflation, which could counter any benefit from lower interest rates.

The Fed, and Wall Street, will get another update on inflation on Thursday, when the government releases the personal consumption expenditures price index, or PCE. It is the Fed’s preferred measure for inflation.

The Fed will meet next week for its policy meeting on interest rates and Wall Street is betting that the central bank will hold its benchmark interest rate steady.

Wall Street is also in the midst of the latest round of corporate earnings, which could help provide more insight into how companies are handling uncertainty from tariffs, geopolitics and cautious consumers.

Industrial and consumer conglomerate 3M slumped 6.9% after reporting mixed results for its most recent quarter. United Airlines and Netflix will report their results after the market closes on Tuesday. Companies from a wide range of industries will report their results this week, including Johnson & Johnson, Halliburton and Intel.

AP Business Writers By Yuri Kageyama and Matt Ott contributed to this report.

Specialist Anthony Matesic, left, and trader Fred Demarco work on the floor of the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP Photo/Richard Drew)

Trader Chris Lagana works on the floor of the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP Photo/Richard Drew)

Trader Vincent Napolitano, left, on the floor of the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP Photo/Richard Drew)

Morning commuters pass the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP Photo/Richard Drew)

Morning commuters pass the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP Photo/Richard Drew)

Options trader Steven Rodriguez works on the floor of the New York Stock Exchange, Friday, Jan. 16, 2026. (AP Photo/Richard Drew)

Options trader Kirk Katzburg, center, works on the floor of the New York Stock Exchange, Friday, Jan. 16, 2026. (AP Photo/Richard Drew)

FILE - President Donald Trump speaks with reporters before boarding Air Force One at Lehigh Valley International Airport in Allentown, Pa., Aug. 3, 2025. (AP Photo/Julia Demaree Nikhinson, File)

A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Jan. 19, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Jan. 19, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), right, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 20, 2026. (AP Photo/Ahn Young-joon)

People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Jan. 19, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A currency trader reacts near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 20, 2026. (AP Photo/Ahn Young-joon)