DAVOS, Switzerland (AP) — Investors appeared to have gotten through to President Donald Trump about the risk posed by his designs for Greenland with a message he wasn't hearing from European leaders: Threatening allies with tariffs and land seizure isn't exactly the type of policy that generates confidence in the global economy.
Trump on Wednesday backed off his threat to slap punishing tariffs on eight European allies for opposing his insistence on acquiring Greenland from longtime ally Denmark after the plan spooked Wall Street by sparking serious talk within NATO about a fundamental rupture to the transatlantic military alliance that's been a linchpin of post-World War II security.
Markets had seen their biggest losses since October as Trump prepared to travel to Davos, Switzerland, to give a keynote address to leaders and the global elite at the World Economic Forum.
Trump grumbled about what he called a stock market “dip” with some annoyance during the speech, complaining the market gyrations happened despite the U.S. “giving NATO and European nations trillions and trillions of dollars in defense.”
But during that speech, he made his first abrupt shift in position for the day: He took off the table the option of using military force to take over Greenland.
"I won’t do that. OK?” Trump told the packed conference room.
Then, hours later, Trump announced he was retreating from the tariffs altogether after he said he had come to terms with NATO Secretary-General Mark Rutte on a “framework” on Greenland that "gets us everything we needed to get” if the agreement is consummated.
Trump promptly took to financial network CNBC just before Wall Street trading ended for the day, boasting that the framework was “going to be a very good deal for the United States” and allies.
He downplayed the role that the jittery market played on his decision on tariffs. “No, we took that off because it looks like we have pretty much a concept of a deal,” Trump said.
Trump didn't offer details on the terms of that framework. But the S&P 500 rallied 1.2% after his remarks, recovering about half the ground it had lost a day earlier. The Dow Jones Industrial Average also rose 1.2%, as did the Nasdaq Composite.
After the retreat, Denmark's foreign minister Lars Løkke Rasmussen cautiously offered that “the day is ending on a better note than it began" but said the details of the agreement still need to be worked out.
One idea NATO members have discussed as part of the compromise would see Denmark and the alliance working with the U.S. to build out more U.S. bases in Greenland, according to a European official familiar with the matter but not authorized to comment publicly. The official said it was not immediately clear if that idea was included in the contours of the framework that Trump and Rutte discussed on the sidelines of Davos on Wednesday.
Rutte in an appearance on Fox News on Wednesday evening gave little hint about what precisely he and Trump agreed to.
“We agreed that he’s right, and he’s right that collectively we have to protect the Arctic regions,” Rutte said. “But also, of course, the U.S. continue its conversations with Greenland and Denmark when it comes to how can we make sure that the Russians and China will not gain access to the economy or a military sense of Greenland.”
It wasn't just the financial markets that were telling Trump to rethink the tariffs and tough rhetoric toward allies.
A number of U.S. officials had also been concerned about Trump’s hardline stance and bellicose language toward Greenland, Denmark and other NATO allies because they feared it could harm other foreign policy goals.
These officials thought the fixation on Greenland and Trump's earlier comments suggesting that the potential splintering of NATO was a cost he might be willing to pay were complicating the president’s effort to form the Board of Peace, which he's expected to spotlight Thursday in Davos. The U.S. officials spoke on condition of anonymity to discuss concerns being floated inside the administration.
Many European countries, which were already skeptical of the proposed board’s broad global mandate, had reacted even more negatively to the concept after Trump’s tariff threat. The board, which was born from Trump's 20-point plan to end the Israel-Hamas war, was initially envisioned as a small group of world leaders overseeing the Gaza ceasefire but has morphed into something far more ambitious.
A few European nations have even declined their invitations.
“The interpretation that European leaders are going to take from this is that actually standing up and being firm defused the crisis,” said Max Bergmann, director of the Europe, Russia and Eurasia Program at the Center for Strategic and International Studies. “Trump is acting like a bully, and the only way that we’re going to have a stable relationship is if we push back.”
But Matthew Kroenig, vice president and senior director of the Atlantic Council’s Scowcroft Center for Strategy and Security, countered that the idea that Trump would seize Greenland seemed more like a bluff all along — and one that may have worked.
“Most of the world was freaking out over these threats,” Kroenig said. But he he noted there are some downsides to that negotiating style.
For one, it drove the prime minister of Canada, a close U.S. ally, to propose that smaller countries unite against aggressive superpowers.
“It’s been unnecessarily dramatic, costly and damaging, but all the damages so far are repairable,” added Daniel Fried, a former U.S. ambassador to Poland who is now a distinguished senior fellow at the Atlantic Council in Washington.
That possibility, Fried noted, would be harder to achieve had Trump continued on the path with Greenland where he appeared to be heading.
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AP writers Stan Choe in New York and Matthew Lee in Washington contributed reporting.
President Donald Trump, right, meets with NATO Secretary General Mark Rutte during a meeting on the sidelines of the Annual Meeting of the World Economic Forum in Davos, Switzerland, Wednesday, Jan. 21, 2026. (AP Photo/Evan Vucci)
President Donald Trump walks down stairs after a meeting during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Wednesday, Jan. 21, 2026. (AP Photo/Markus Schreiber)
President Donald Trump speaks during a meeting of Global Business Leaders at the Annual Meeting of the World Economic Forum in Davos, Switzerland, Wednesday, Jan. 21, 2026. (AP Photo/Evan Vucci)
ZÁRATE, Argentina (AP) — The vast field of over 5,800 electric and hybrid vehicles gleamed on the cargo deck of the BYD Changzhou, an Chinese container vessel unloading Wednesday at a river port in eastern Argentina.
In other places, such a scene would not be noteworthy. Chinese automaker BYD has sped up its exports and undercut rivals the world over, alarming Washington, upsetting Western and Japanese auto giants and unnerving local industries across Southeast Asia, Africa and Latin America.
But the sight of so many new Chinese EVs gliding onto a muddy river bank in Buenos Aires province was unprecedented for Argentina, its crisis-stricken economy dominated for years by a left-wing populist movement that protected local industry with stiff tariffs and import restrictions.
“For decades people in Argentina had this vision that everything here must be manufactured here," said Claudio Damiano, a professor in the Institute of Transportation at Argentina’s National University of San Martin. “The boat has a symbolic value as the first step for BYD. Everyone’s wondering how far it will go.”
The shipment also came in stark contrast to the news in Brussels, where on Wednesday European Union lawmakers voted to delay ratification of a landmark free trade deal with the Mercosur group of South American countries, including Argentina, which promises to tear down trade barriers for European industrial imports and supercharge consumption of German EVs.
“For the Europeans, there's just no possibility of competing with the Chinese,” Damiano said.
Argentina became one of the region’s most closed economies under Kirchnerism — the movement formed by ex-President Cristina Fernández de Kirchner and her late husband, former President Néstor Kirchner, which championed the rights of the downtrodden, defaulted on sovereign debt and disdained global trade as a destructive force.
A chronically depreciating peso and sky-high taxes constrained consumer choice, compelling well-heeled Argentines to smuggle iPhones and Zara hauls into the country when returning from vacations abroad.
Fed up with cycles of economic crisis, Argentines vaulted radical libertarian President Javier Milei to power in 2023. He railed against Kirchnerism, vowed to destroy the state and praised U.S. President Donald Trump as an ideological soulmate.
For the last two years, Milei has has done the exact opposite of his most powerful ally in Washington.
While Trump has waged trade wars, Milei has flung open Argentina’s doors to imports, slashed trade barriers, unwound customs red tape and shored up the local currency to make foreign goods more affordable.
Last year Argentina logged a record 30% increase in imports compared to the year before — much of it in the form of $3 milk frothers and $10 dresses piling up on Argentines' doorsteps from Asian online retailers such as Temu and Shein.
Now Chinese automakers — once choked by 35% levies on imports — are seizing on a new measure to allow 50,000 electric and hybrid cars into the country this year tariff-free. The first shipment arrived Monday at Zárate Port after a 23-day voyage from Singapore.
Telling business and political leaders Wednesday at the World Economic Forum in Davos that that his drastic deregulation measures “allow us to have a more dynamically efficient economy,” Milei declared: “This is MAGA, ‘Make Argentina Great Again.
Milei and Trump share a contempt for perceived “wokeness,” a resentment of multilateral institutions like the United Nations, a denial of climate change and a zeal for massive budget cuts.
The ideological bond has paid dividends for Milei: Argentina is a rare place in the region where Trump has wielded the might of the U.S. to help an ally rather than enforce demands with military threats, as he has in Colombia and Mexico. Last year he offered Milei a $20 billion credit swap to boost his friend's chances in a crucial midterm election.
Yet at Davos, the leaders' differences were on display. Milei delivered his anti-interventionist, libertarian interpretation of MAGA shortly after Trump laid out his own vision for making America great: demanding control of Greenland and threatening allies with tariffs and other consequences if they don’t fall in line.
For all of Trump's support, China has perhaps benefited most from Milei's free-market drive.
Chinese imports to Argentina surged over 57% last year compared to the year before. Chinese investment poured into Argentina's energy and mining sectors.
“Argentina has rejoined the world," government spokesperson Javier Lanari said of Monday's Chinese car shipment. “Very soon, the Cuban-made vehicles left to us by Kirchnerism will be part of a sad and dark past.”
BYD and similar Chinese cars have already taken the streets of Latin America by storm, drawing controversy and backlash from Mexico City to Rio de Janeiro.
Now the brands are best positioned to reap the rewards of Milei’s zero-tariff quota for EVs, which applies only to cars under $16,000, experts say.
“Chinese manufacturers have the technology and the ability to meet the price limits set by the government," said Andrés Civetta, an economist specializing in the auto sector at the Argentine consulting firm Abeceb. “China has won the race."
Western car manufacturers in Argentina have raised alarms about unfair competition, and opposition lawmakers have criticized officials on the Chinese EV tariff exemption, with the comptroller general posting on social media, “Trump is right: China must be stopped.”
But Argentina is still far behind its neighbors in developing its EV industry, said Pablo Naya, the creator of Sero Electric, Argentina's only domestic electric car manufacturer.
The country's aging power grid is nowhere near ready for a wave of electric cars to strain it en masse, he said. And if something goes wrong with a Chinese EV on the road, there are currently no dealers' service centers able to undertake internal repairs.
“Honestly, we’re not worried,” Naya said.
But if or when Argentine infrastructure and consumer aspirations catch up to Chinese supply, it will be a different story.
“Then that would get complicated for us,” he said from the Sero Electric factory in the Buenos Aires suburb of Castelar. “We'd have a problem."
Ignacio Palacios works on a Sero Electric microcar at its factory in Castelar, Argentina, Wednesday, Jan. 21, 2026. (AP Photo/Victor R. Caivano)
Hybrid and electric vehicles shipped from China are unloaded from the BYD Changzhou car carrier docked at Terminal Zarate, in Argentina's Buenos Aires province, Tuesday, Jan. 20, 2026. (AP Photo/Victor R. Caivano)
BYD hybrid and electric vehicles shipped from China are parked at Terminal Zarate in Argentina's Buenos Aires province, Tuesday, Jan. 20, 2026. (AP Photo/Victor R. Caivano)
Pablo Naya, the owner of Sero Electric, poses next to one of the company's electric microcars at its factory in Castelar, Argentina, Wednesday, Jan. 21, 2026. (AP Photo/Victor R. Caivano)
The BYD Changzhou car carrier is docked at Terminal Zarate in the Buenos Aires province of Argentina, Tuesday, Jan. 20, 2026, where hybrid and electric vehicles shipped from China are parked next to the ship. (AP Photo/Victor R. Caivano)
