Risk has taken a hit, as has the US dollar after the news over the weekend of Trump promising higher tariffs again and Europe assessing retaliation
Earlier:
- Monday open indicative forex prices, 19 Jan 2026. ‘Risk’ lower on Trump’s latest trade war
- EU calls emergency summit as Trump escalates Greenland tariff threat. Euro a little lower.
- US stock markets have fallen after Trump’s extra tariffs announcement over the weekend
- Gold has hit a record high after Trump’s extra tariff plan announced over the weekend
As a recap.
The European Union is moving swiftly to prevent a deepening trade confrontation with the United States after President Donald Trump threatened to impose sweeping tariffs on European allies in a dispute centred on Greenland.
EU officials say the bloc is now operating on two fronts: ramping up diplomatic engagement with Washington in an effort to defuse tensions, while simultaneously preparing retaliatory measures should negotiations fail. The standoff is set to dominate discussions at an emergency summit of EU leaders in Brussels on Thursday, reflecting growing concern that the dispute could spiral into a broader transatlantic trade clash.
Trump announced over the weekend that the United States would introduce tariffs of 10% from February 1 on a group of European countries, including Denmark, France, Germany and Sweden, with the rate rising to 25% from June. The measures, he said, would remain in place unless the U.S. is allowed to purchase Greenland — a demand European leaders have dismissed as unacceptable pressure on close allies.
Brussels has responded by reviving preparations for a long-suspended package of countermeasures targeting €93 billion worth of U.S. imports. Those tariffs were frozen last August after a temporary trade understanding between the EU and Washington, but officials say they are now set to automatically come back into force on February 6 unless a new agreement is reached.
Beyond tariffs, EU capitals are weighing whether to deploy the bloc’s Anti-Coercion Instrument, a far-reaching tool designed to respond to economic pressure from third countries. The mechanism would allow the EU to limit U.S. access to public procurement contracts, investment opportunities, financial services and parts of the digital economy. While several member states favour using the instrument to send a strong signal, diplomats say support remains uneven, with many governments preferring to begin with more traditional trade retaliation.
European Council President Antonio Costa said consultations among member states had demonstrated firm unity in support of Denmark and Greenland, alongside a shared readiness to resist what the bloc views as coercive trade tactics. At the same time, he stressed that the EU remains open to dialogue with Washington.
Danish Prime Minister Mette Frederiksen echoed that message, saying Europe would not bend under pressure and welcoming the solidarity shown by EU partners.
Attention is now turning to the World Economic Forum in Davos, where Trump is expected to appear later this week. EU officials hope the gathering will provide an opportunity to de-escalate tensions, but warn that failure to do so risks renewed market volatility and further strain on already fragile transatlantic trade relations.
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Gold update:
This article was written by Eamonn Sheridan at investinglive.com.