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Prof G Markets

Europe Braces for Trump’s Greenland Tariffs

20 Jan 2026

Transcription

Chapter 1: What are the implications of Trump's new tariffs on Greenland?

3.068 - 30.312 Unknown

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Today's number? 3,000. That's how many international leaders are set to attend the World Economic Forum's annual meeting in Davos this week. Today's other number is 300. That's how many sex workers will also be joining. Money markets matter. If money is evil, then that building is hell. The show goes on! Get back in there and watch the show! Show! Welcome to Profiteer Markets. I'm Ed Elson.

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64.3 - 90.438 Ed Elson

That last joke is actually true. Look it up. It is January 20th. Let's check in on yesterday's market vitals. U.S. markets were closed for MLK Day. Still, S&P and Nasdaq futures sank 1% as tensions flared over Greenland. More on that in a moment. Meanwhile, the dollar slid, Bitcoin declined, and gold hit a record high. Okay, what else is happening?

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90.458 - 115.392 Ed Elson

President Trump has upped the stakes for a Greenland acquisition, presenting Europe with a new tariff ultimatum. Over the weekend, he announced 10% tariffs on eight European countries starting February 1st. According to Trump's Truth Social post, the rate will rise to 25% in June unless there is a deal reached for what he called, quote, "'the complete and total purchase of Greenland.'"

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115.372 - 133.5 Ed Elson

The targeted countries are putting up a united front, warning this could spark, quote, a dangerous downward spiral. French President Emmanuel Macron is urging the EU to use its trade bazooka, more formally known as the anti-coercion instrument, which could lock the US out of European markets.

133.58 - 154.355 Ed Elson

Meanwhile, Danish officials are skipping the World Economic Forum in Davos in protest, and Denmark deployed additional troops to Greenland on Monday. European stocks had their worst day in two months yesterday, and gold and silver hit fresh all-time highs, another signal that investors are searching for safety.

154.515 - 180.765 Ed Elson

So, here to discuss what is at stake with potentially another trade war between America and Europe, we are joined by pod favourite Robert Armstrong. U.S. financial commentator for the Financial Times and author of the Unhedged newsletter. Rob, welcome back once again to Profiteer Markets. Good to see you at the end of a very strange weekend. A very strange weekend indeed.

180.745 - 201.661 Ed Elson

We want to jump right into it. So we've got 10% going up to 25% tariffs on eight European countries that have expressed solidarity with Greenland. We've got Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland. Let's just start with your initial reactions, Rob.

202.382 - 236.943 Robert Armstrong

First reaction, is it going to actually happen? As far as I know, the threatened tariffs on any country that trades with Iran have not happened. We had a tweet from the president that was happening. It then just drifted to wherever presidential tweets go when they're not with us. So... So, you know, the rhetoric is pretty strong. There was the bizarre text to the leader of Norway.

Chapter 2: How are European markets reacting to Trump's tariff threats?

349.969 - 374.168 Robert Armstrong

And some countries get the taco treatment and some countries get the Fafo treatment. And his point was that the weak... get FAFO, and the strong get taco. In other words, countries that put up a little bit of resistance, Brazil, China, Russia to a degree, actually taco is the most common outcome.

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374.789 - 396.358 Robert Armstrong

If countries show weakness or are too weak to protect themselves, like Venezuela, they see bold Trump. They see FAFO Trump. So we might ask at this point, Is Europe going to be strong in response, in which case we might expect TACO and the situation to stabilize and cool off?

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397.299 - 417.843 Robert Armstrong

Or do they get into a characteristically European mode of tripping over their own feet and their own internal political squabbles, come with a weak and divided response, in which case they get FAFO? Right? The hard side of Trump. So I'm not sure that's true, but I think it's a kind of intriguing way to think about it. Right. Right.

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417.884 - 431.168 Robert Armstrong

And I would bet that you are right, that this is a situation where Trump will be prepared to back off, but only if... Europe shows willingness to up the ante.

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431.188 - 451.371 Ed Elson

Yes. And by the way, it seems that they do, or at least... Yes. I mean, that's what we're hearing with this talk of a trade bazooka, which I've never heard of. Right. This is what Emmanuel Macron has been suggesting, that they use the anti-coercion instrument. They call it the trade bazooka. I love that.

451.731 - 457.718 Robert Armstrong

Yeah, I love the anti-coercion instrument. It's like a special axe they keep in a box and

457.698 - 473.306 Ed Elson

From my understanding, it's basically just some export controls. I'm not sure exactly what makes it a bazooka versus any other trade weapon.

473.686 - 499.23 Robert Armstrong

It just means Europe is committed to a lot of global principles and of kind of fair and reciprocal trading with its trade partners. And I think basically what the anti-coercion instrument does is release them from those commitments. So they are, it basically says, it's a situation where you've been nasty to us and we can be nasty right back.

499.751 - 527.23 Ed Elson

Even if it is a taco, I think it probably is. It does seem that there is a vibe change that has occurred, and that is the post and the statement itself is just offensive to Europe. Yes. So, you know, that's why Macron is reacting the way he has, and you've seen people like Keir Starmer speaking out, and basically any EU leader is coming out and saying, hey, this is unacceptable.

Chapter 3: What is the potential impact of Trump's tariffs on U.S.-EU relations?

643.479 - 654.328 Ed Elson

And for even more markets content, you can subscribe to my new weekly newsletter. It's called Simply Put. You can find it at edwardelson.substack.com.

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