Global stock markets are preparing for renewed volatility when trading resumes on Monday after former U.S. president Donald Trump threatened to impose fresh tariffs on eight European countries unless they support his proposal to acquire Greenland.
Trump has outlined plans to levy a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland starting February 1, rising to 25% from June 1. The announcement has unsettled investors and raised concerns among European businesses about renewed trade disruption and geopolitical instability.
Weekend trading indicators from brokerage IG suggest the London Stock Exchange is likely to open lower on Monday, while Wall Street, which resumes trading on Tuesday, is also expected to weaken. Analysts say escalating geopolitical risks could further push investors toward safe-haven assets.
“This latest flashpoint has heightened concerns over a potential unravelling of Nato alliances and the disruption of last year’s trade agreements with several European nations, driving risk-off sentiment in stocks and boosting safe-haven demand for gold and silver,” said Tony Sycamore, market analyst at IG.
IG’s weekend market data indicated Britain’s FTSE 100 index could fall by around 0.9% on Monday, while the Dow Jones industrial average was pointing to a 0.5% decline. Gold prices were trading about 0.6% higher at $4,625 an ounce, approaching last week’s record of $4,642, while spot silver rose 0.5% to $90.41 an ounce.
European leaders reacted sharply to Trump’s announcement. UK Prime Minister Keir Starmer and European Commission President Ursula von der Leyen warned that the move risks undermining Nato unity and destabilizing transatlantic relations.
Susannah Streeter, chief investment strategist at Wealth Club, said the policy shift had “whipped up fresh economic chaos” and could weigh heavily on the UK economy. She noted that businesses have already struggled to absorb existing tariffs, leaving little room to accommodate further increases. “This new tranche of duties is likely to end up being passed on to American customers,” she said.
European industry groups signalled growing pressure on policymakers to respond more firmly. Germany’s engineering association, the VDMA, urged the European Commission to consider using its anti-coercion instrument against the United States. VDMA president Bertram Kawlath warned that yielding to pressure would encourage further demands and threats of additional tariffs.
Hildegard Müller, president of the German automotive industry association, cautioned that the added tariffs would impose ‘enormous’ costs on German and wider European industry.
In the UK, William Bain, head of trade policy at the British Chambers of Commerce, said the proposed tariffs would be another setback for exporters and called on the government to revive last year’s trade agreement with the United States, which was frozen last month. Bain said boosting transatlantic trade depends on reducing barriers rather than raising them, urging calm negotiations to remove the threat of new tariffs.
Markets are expected to remain sensitive to further political developments as investors assess the potential economic and diplomatic fallout of the proposed measures.
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