US Stocks Surge as Trump Drops Greenland Tariff Threats

US stock markets rose sharply on Wednesday after President Donald Trump announced he is dropping plans for tariffs on several European countries. The move came during a speech at the World Economic Forum in Davos, Switzerland, and followed weeks of tension over Trump's push to gain control of Greenland. The S&P 500 gained 1 percent, while the Dow Jones Industrial Average surged nearly 600 points in a strong rebound.

Background

Trump has made Greenland a focus since taking office again. He sees the island's location in the Arctic as key for US national security, especially for missile defense. Greenland is a self-governing territory under Denmark, which is part of the European Union. Trump first raised the idea of buying or taking control of Greenland during his first term, but it drew strong pushback from Denmark and European allies.

In recent weeks, the pressure grew. Trump threatened 10 percent tariffs on eight European nations, including Denmark, the UK, France, and Germany. He said the tariffs would start on February 1 and rise to 25 percent by June 1 unless a deal was reached for full US control of Greenland. Markets reacted badly at first. On Tuesday, the Dow dropped 870 points as fears of a trade war spread.

European leaders stood firm. UK Prime Minister Keir Starmer said he would not give in on Greenland. European Commission President Ursula von der Leyen warned that the EU was ready to respond to any tariffs. The EU even paused a new trade deal with the US that had been agreed in July to lower tariffs on European goods. That deal was meant to bring stability after past disputes.

Trump also talked about using military force earlier this month. He explored options, including action to take the territory. But in his Davos speech, he made clear that would not happen. The announcement led to a quick market turnaround. By midday Wednesday, stocks were up across the board.

Key Details

The big news was Trump's announcement of a 'framework' deal on Greenland. This eases the immediate tariff threat and opens talks on US interests there. Negotiations will be led by Vice President JD Vance, Secretary of State Marco Rubio, and Special Envoy Steve Witkoff. The talks include plans for a missile defense system on the island.

Market Movements

The Dow closed up 580 points after the speech. The S&P 500 hit a 1 percent gain, its best day in weeks. Other indexes followed. The rebound wiped out much of Tuesday's losses. Investors had worried about broader trade fallout, but the pullback calmed nerves.

In Europe, markets were mixed. The STOXX 600 dipped slightly, but the tariff news helped limit damage. Traders watched for signs of more deals.

"We probably won't get anything unless I decide to use excessive strength and force, where we would be frankly unstoppable. But I won't do that, OK?" – President Donald Trump, in his Davos speech.

European lawmakers acted fast against the threats. Bernd Lange, who chairs a European Parliament group on trade, called the tariffs a blow to US-EU ties. He said they undermine trust built by the July trade agreement. The EU's move to suspend ratification shows how serious they are about defending Denmark and Greenland.

NATO plays a role too. Greenland's spot is vital for Arctic defense, which helps all alliance members. NATO Secretary General Mark Rutte spoke at Davos about working with Trump on alliance changes. He said NATO countries should welcome Trump's push to reshape things, even if it's not popular in Europe.

Denmark has stayed quiet so far. A spokesperson for their US embassy did not comment right away. But past statements show strong opposition to any US takeover.

What This Means

The market jump shows how much trade fears can move indexes. A full trade war with Europe would hit US companies that sell there and buy parts from abroad. Dropping the tariffs avoids that for now and boosts confidence.

For Greenland talks, the framework is a start. It focuses on security without full purchase. This could lead to shared control or bases, easing European worries. But details matter. If talks stall, tariffs could return.

US allies in Europe get some breathing room. The EU trade deal might move forward again if tensions stay low. NATO could benefit from clearer Arctic plans.

Investors now look to the negotiators. Vance, Rubio, and Witkoff have Trump's ear. Their progress will shape markets in coming months. Broader US trade policy under Trump remains in flux, with other countries watching closely.

The Davos speech marked a pivot. Trump went from threats to deal-making. This fits his style of using pressure to negotiate. Stocks reflect relief, but the full picture depends on what comes next from the talks.

Everyday Americans might see effects in prices. Lower trade risks mean steadier costs for cars, food, and goods from Europe. Farmers and manufacturers, big exporters, gain from open markets.

Greenland's people have a say too. As a self-governing area, they vote on big changes. Past polls show little interest in joining the US. The framework respects that for now.

Wall Street closed strong. Volume was high as buyers piled in. Analysts say the rally could continue if deal news stays positive. But any setback might spark pullbacks.

This story ties into bigger US goals. Arctic control helps counter Russia and China there. Missile defense fits long-term plans. The tariff drop keeps allies on board while pushing aims.

European responses will evolve. Leaders like von der Leyen and Starmer must balance trade with sovereignty. Their next moves could test the framework's strength.