Global markets are bracing for renewed volatility as President Donald Trump’s campaign to acquire Greenland fuels uncertainty across equities, currencies, and geopolitics. The threat of new tariffs aimed at pressuring Europe has rattled investors, revived fears of a transatlantic trade war, and raised once-unthinkable questions about the future of NATO. Yet analysts say three key factors could still derail Trump’s ambitions and steer markets toward a more orderly outcome.
1. A looming Supreme Court decision on tariffs
The most immediate check on Trump’s strategy could come from the US Supreme Court. A ruling expected as early as this week may determine whether the White House can continue using the International Emergency Economic Powers Act (IEEPA) to impose tariffs. The administration has relied heavily on the law to justify trade measures, and legal observers widely expect the court to curb that authority.
While Trump has not specified which legal mechanism would underpin Greenland-related tariffs, losing the IEEPA option would significantly weaken his leverage over European allies. For markets, such a decision could remove the single largest near-term risk driver behind recent sell-offs.
2. Rising domestic political resistance
Trump’s Greenland push also faces strong headwinds at home. Polling by CBS News and YouGov shows roughly 70% of Americans oppose using federal funds to acquire Greenland, while 86% reject the use of military force. Resistance extends into Republican ranks, where lawmakers have warned that confronting NATO allies could damage US credibility and security partnerships.
Economic realities may further amplify that opposition. A recent study found that American companies and consumers absorbed about 96% of tariff costs in 2024 and 2025. Any escalation into a broader trade war with Europe could deepen inflationary pressures and reignite voter backlash—an outcome few in Congress appear willing to accept.
3. A more unified and assertive Europe
European leaders, meanwhile, are signaling greater resolve than in past confrontations with Washington. The European Union is weighing a suspension of a previously agreed US–EU trade deal and has drawn up a potential $109 billion package of retaliatory “anti-coercion” measures targeting selected American goods and services.
Denmark has already moved to reinforce its presence in Greenland, while EU officials have pledged solidarity with Copenhagen and Nuuk. The show of unity has complicated Trump’s calculations, particularly as withdrawing US military support for Ukraine—one potential pressure point—would carry heavy political costs at home and risk appearing to benefit Russia.
Markets caught between risk and restraint
The combination of legal uncertainty, domestic pushback, and European resistance has made the situation exceptionally difficult for markets to price. Investors are grappling with tail risks that include a breakdown in NATO relations or a full-scale US–Europe trade war—scenarios with few historical precedents.
Still, traders note that past episodes of Trump-led tariff brinkmanship have often ended in compromise rather than catastrophe. For now, the prevailing bet in financial markets is that institutional and political constraints will ultimately limit how far the Greenland gambit can go.
As world leaders gather in Davos this week under the banner of “A Spirit of Dialogue,” investors will be watching closely for signs that rhetoric gives way to negotiation—or that another shock is just around the corner.
