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- President Trump has backed away from considering the use of military force in acquiring Greenland and announced a new framework deal with NATO.
- Trump also canceled tariffs on eight European countries that were targeted earlier this week, with global stock markets posting their strongest gains in two months in response.
- European leaders remained cautious despite easing tensions, noting that the dispute has not been fully resolved.
In a stunning reversal, President Trump pulled back from his previous threats over the use of military force in acquiring Greenland and imposing tariffs on European allies, announcing a vague framework agreement with NATO.
After weeks of escalating tensions, Trump said the deal addresses US security concerns in the Arctic while involving mineral rights and his plans to implement a defense system for Greenland. Markets surged on the news, erasing losses from earlier this week.
Trump Cancels Tariffs After NATO Meeting
Days earlier, Trump had threatened Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland with more tariffs, starting at 10% on February 1 and climbing to 25% by June. The threat had sent shockwaves through the NATO alliance.
After meeting with NATO Secretary General Mark Rutte in Davos, Trump’s tone shifted dramatically. He said Western Arctic allies could forge a deal that blocks Russian and Chinese ambitions while giving the US access to critical minerals and enabling his proposed missile defense system. ⁽¹⁾
Trump described it as the ultimate long-term arrangement, even calling it “a deal that’s forever”. Rutte said the issue of whether Greenland remains with Denmark didn’t come up. Trump’s real focus is on protecting the Arctic region, where Chinese and Russian activity is increasing according to analysts. ⁽²⁾
Trump announced on Truth Social that the US and NATO had formed the framework of a future deal covering Greenland and the entire Arctic region. Based on this understanding, the February 1 tariffs were removed.
Markets Rally as Trump Rules Out Military Force
The market reaction was immediate, with major stock indices posting their biggest gains in two months. The S&P 500 surged 1.16%, reversing Tuesday’s sharp sell-off triggered by Trump’s comments on Greenland.
Gold pulled back from its all-time high at $4,880/oz on eased tensions while the US dollar rallied.
Minutes after his announcement, Trump described the framework as the concept of a deal. Pressed for specifics, he said it’s complex but will be explained later.
He confirmed the framework involves mineral rights for the US and his proposed Golden Dome missile defense system. ⁽³⁾
European Response: Relief with Reservations
European diplomats said Trump’s shift in tone doesn’t resolve the dispute but defuses an increasingly public rift between allies. ⁽⁴⁾
Danish Foreign Minister Lars Løkke Rasmussen said what matters most is ending this with respect for Denmark’s sovereignty and Greenland’s right to self-determination.
He later posted that the day was ending on a better note than it began, urging parties to address American security concerns while respecting Denmark’s red lines. ⁽⁵⁾
Trump’s Broader Davos Message
Trump’s Davos speech focused heavily on Greenland but also included sharp criticism of Europe. He cast himself as a defender of Western values, saying he wants strong allies, but that Europe is heading in the wrong direction. ⁽⁶⁾
He called Denmark ungrateful and dismissed the territorial dispute as a small ask over a piece of ice, while also insisting Greenland is strategically vital.
As of now, the immediate crisis seems to have passed. Markets are relieved, and the threatened tariffs are shelved for now.
