Aggressive tariff threats. Punishing historic allies. Disregarding Danish sovereignty. Perhaps in President Trump’s mind the ends justify the means.
This week, Trump’s high stakes push to acquire Greenland quickly escalated into a geopolitical hubbub. On Tuesday, Greenland’s Prime Minister Jens-Frederik Nielsen told authorities to start preparing for a possible military invasion.
Trump’s motivation includes security and control of the G-I-UK Gap (the northern Atlantic gap between Greenland, Iceland and the United Kingdom) and ownership of vast amounts of rare earth elements. These ambitions all fit perfectly within the framework of the Donroe Doctrine and the objective of asserting undisputed American supremacy throughout the Western Hemisphere.
Denmark, however, remains stubbornly resistant to these advances. So far, the big chill emanating from these frigid northern waters is being felt directly in the fluctuating value of the U.S. dollar.
Typically, when the world gets nervous, the dollar acts like a comfortable weighted blanket that everyone hides under for safety. But this time, that blanket has holes in it as investors grow tired of the extreme diplomatic posturing.
Trump, as far as we can tell, isn’t just scouting for a scenic new spot for a luxury golf course. Rather, he covets Greenland’s massive, untouched cache of critical minerals.
These materials are the essential building blocks of the modern economy. They’re required for everything from advanced AI computer chips to EV batteries and sophisticated precision guided weapons systems.
Currently, Beijing has a stranglehold over the global supply of rare earth elements. Having complete, sovereign control over Greenland’s untapped reserves would be a massive strategic asset for generations to come.
But Greenland belongs to the Kingdom of Denmark. And Denmark, standing firm with its European neighbors, is not on board with relinquishing control of its territory.
Greenland or Bust
Trump’s initial efforts to strike a friendly deal were flatly rejected. Don Trump Jr. had even previously taken to the streets of Nuuk to hand out MAGA hats to locals. This act of kindness failed to cement a lasting bond. Consequently, the rhetoric shifted from negotiation to a more aggressive stance of making them pay.
Last weekend, Trump announced on Truth Social that starting February 1, eight European nations – including the UK, Germany, and France – would face a 10 percent blanket tariff on all exports to the U.S. If there’s no deal for Greenland by June, that number would jump to 25 percent.
These tariff threats were perceived as more than just a traditional trade war. European leaders called them economic blackmail. Markets reacted in kind.
Usually, in a crisis, people buy dollars. But because the U.S. was the source of this instability, investors ran to gold and silver. In fact, this week gold eclipsed $4,900 per ounce while silver spiked above $96 per ounce. Everyone’s losing trust in the dollar.
Tariffs, as we’ve mentioned many times before, act as a tax on the American consumer. A 25 percent tax on European cars, seafood, and machinery means higher prices at home. Higher prices mean higher inflation
Higher consumer price inflation typically compels the Federal Reserve to hike rates. But with Trump openly hammering Fed Chair Powell, investors are worried the central bank has lost its independence. When people stop trusting the central bank, they stop trusting the currency.
At the same time, the EU dusted off its Anti-Coercion Instrument and threatened €93 billion in counter-tariffs. Obviously, a trade war between the two biggest economic blocs on earth would be followed by a global slowdown.
The rhetoric continued in Davos…
Davos Losers
This week a vast collection of globalists and billionaires overran the Swiss Alps for the annual circus in Davos. Trump made a grand, fashionably late, appearance on Wednesday. True to form, he did his best to stir the pot and set the agenda on fire.
He kicked things off by called for immediate negotiations to acquire Greenland, flat out calling it “our territory.” He openly ridiculed Denmark, pointing out they lost the territory in six hours during WWII, inferring they’re lucky we gave it back.
He also promised not to use excessive force to get the deal done. But he made sure everyone in the room knew he could be unstoppable if he wanted to be. He then left the Danes with an ultimatum: “You can say yes and we’ll be appreciative, or you can say no and we will remember.”
Trump also turned his sights on climate change activists and fired shots at the green energy crowd. He called wind turbines total losers. He stressed that they’re killing the birds, ruining the world’s most beautiful views, and making every taxpayer go broke. He essentially called the European leaders fools for buying wind turbines from China.
Even fashion choices weren’t safe. French President Emmanuel Macron, who showed up wearing Top Gun aviator sunglasses indoors – apparently due to a burst blood vessel – also became an object of Trump’s ridicule.
“I watched him yesterday with those beautiful sunglasses,” Trump laughed. “What the hell happened?”
Trump certainly had his fun while amongst the Davos elites. But what will come of it?
Meltdown in the Alps
Warren Buffett once said to “never bet against America.” But that was long before Trump occupied the Whitehouse.
On Tuesday, Trump’s erratic policies prompted a “Sell America” sentiment. This marked a shift in global risk perception. Instead of seeing the USA as a global stabilizer, the world saw it as a source of chaos.
If the U.S. is willing to weaponize its currency and trade to force a sovereign nation to sell its territory, what’s next?
This unpredictability is souring foreign investors on the dollar. No one knows what the next tweet will demand.
This sentiment reached a boiling point on Tuesday, January 20. The Sell America trade effectively wiped out the S&P 500’s gains for the year. On the day, the index nearly dropped 2.1 percent.
But investors didn’t just sell stocks. They sold American assets entirely. While the S&P 500 dropped over 140 points, the U.S. dollar and Treasuries also took it on the chin. The dollar index dropped nearly 1 percent, while gold and silver soared to record highs. Tech stocks also took a beating, with Nvidia and Tesla both declining by over 4 percent.
On Wednesday and Thursday, the U.S. stock market recouped some of Tuesday’s losses, as Trump said he wouldn’t use force to take Greenland. Moreover, later in the day Trump announced on Truth Social that a deal framework had been formed and that he was cancelling the tariffs:
“Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.”
What this deal will ultimately entail is unclear. According to the New York Times, the United States would obtain “sovereignty over land for military bases.”
While the immediate threat of a trade war and complete taking of Greenland has cooled, the underlying financial market volatility simmers hot. Tuesday’s “Sell America” meltdown provides a warning of a fragile future. Heed it with intention.
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Sincerely,
MN Gordon
for Economic Prism
