Global Markets Face Volatility as US–Europe Trade Tensions Resurface Over Tariff Threats
Global financial markets are bracing for renewed volatility following fresh trade tensions between the United States and Europe, after President Donald Trump threatened to impose sweeping tariffs on several European nations. The move has reignited investor concerns over geopolitical risks at a time when markets had hoped trade disputes were easing.
According to Reuters, Trump plans to introduce a 10 per cent import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain. The tariff would increase to 25 per cent from June 1 if negotiations fail. The threat follows a joint statement by the eight European countries expressing support for Greenland, a move that has escalated diplomatic tensions.
The announcement has stirred memories of the “Liberation Day” tariffs of April 2025, which rattled global markets and disrupted supply chains. Analysts warn that while investors have become more accustomed to political brinkmanship, the renewed uncertainty could still weigh on sentiment. “Hopes that the tariff situation has calmed down for this year have been dashed,” said Holger Schmieding, chief economist at Berenberg Bank.
Markets have responded cautiously, with investors turning to safe-haven assets. Gold remains near record highs as traders adopt a risk-off stance, while concerns are growing about potential strains within NATO and the stability of recent trade agreements. “This latest flashpoint has boosted demand for gold and silver,” said IG market analyst Tony Sycamore.
Despite the tension, European equities have so far shown resilience. Major indices such as Germany’s DAX and the UK’s FTSE remain near record highs, supported in part by strong gains in defence stocks. Analysts note that while currency markets—particularly the euro—may face short-term pressure, overall investor confidence has proven surprisingly durable in the face of recurring geopolitical shocks.
source: punch