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By Karin Strohecker, Dhara Ranasinghe and Samuel Indyk
LONDON, Jan 18 (Reuters) – International markets are going through volatility after President Donald Trump vowed to slap tariffs on eight European nations till the U.S. is allowed to purchase Greenland, information that pushed the euro to a seven-week low in late Sunday buying and selling.
Trump stated he would impose an extra 10% import tariff from February 1 on items from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which is able to rise to 25% on June 1 if no deal is reached.
Main European Union states decried the tariff threats over Greenland as blackmail on Sunday. France proposed responding with a spread of beforehand untested financial countermeasures.
As early commerce kicked off in Asia-Pacific, the euro fell 0.2% to round $1.1572, its lowest since November. Sterling additionally dipped, whereas the yen firmed in opposition to the greenback.
“Hopes that the tariff state of affairs has calmed down for this 12 months have been dashed for now – and we discover ourselves in the identical state of affairs as final spring,” stated Berenberg chief economist Holger Schmieding.
Trump’s sweeping “Liberation Day” tariffs in April 2025 despatched shockwaves by markets. Buyers then largely seemed previous U.S. commerce threats within the second half of the 12 months, viewing them as noise and responding with reduction as Trump made offers with Britain, the EU and others.
Whereas that lull may be over, market strikes on Monday could possibly be dampened by the expertise that investor sentiment had been extra resilient than anticipated in 2025 and world financial development stayed on observe.
U.S. markets are closed on Monday for Martin Luther King Jr. Day, which implies a delayed response on Wall Road.
The implications for the greenback had been much less clear. It stays a protected haven, however might additionally really feel the affect of Washington being on the centre of geopolitical ruptures, because it did final April.
Bitcoin, a liquid proxy for danger that’s open to commerce on the weekend, was regular, final buying and selling at $95,330.
Capital Economics stated nations most uncovered to elevated U.S. tariffs had been the UK and Germany, estimating {that a} 10% tariff might cut back GDP in these economies by round 0.1%, whereas a 25% tariff might knock 0.2–0.3% off output.
European shares are close to file highs. Germany’s DAX and London’s FTSE index are up greater than 3% this month, outperforming the S&P 500, which is up 1.3%.
European defence shares will doubtless proceed to profit from geopolitical tensions. Defence shares have jumped nearly 15% this month, because the U.S. seizure of Venezuela’s Nicolas Maduro fuelled issues about Greenland.
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