Stock markets fell sharply on Tuesday, with Wall Street suffering its worst day since October, as investor concerns grew over Donald Trump's threat to impose tariffs on eight European countries. The S&P 500 closed down 2.1%, the Dow Jones fell 1.8%, and the tech-heavy Nasdaq dropped 2.4%, with Amazon, Tesla, and Nvidia all losing billions in market value.
The sell-off followed Trump's weekend threat to impose tariffs on the UK, France, Germany, Denmark, Sweden, the Netherlands, Norway, and Finland unless a deal is reached for the US to purchase Greenland. The tariffs are set to start at 10% on 1 February and rise to 25% on 1 June.
European markets also declined, with the UK's FTSE 100 down 0.7%, France's CAC falling 0.6%, Germany's DAX dropping 1%, and Italy's FTSE MIB off 1.1%. The losses came despite comments from US Commerce Secretary Howard Lutnick at the World Economic Forum in Davos, who downplayed the likelihood of a trade war, suggesting diplomacy would prevail.
UK Chancellor Rachel Reeves urged calm, stating that the future of Greenland is for its people, and called for de-escalation. US Treasury Secretary Scott Bessent also advised European countries not to retaliate, but analysts warned that the crisis could deepen if tensions are not resolved soon.
Investors sought safe havens, pushing gold above $4,700 an ounce and silver to a record high of $95.52 an ounce. The market turmoil reflects ongoing uncertainty over Trump's trade policies and their impact on global economic stability.
