President Trump’s tariff threats against Europe amid Greenland tension revive fears of a trade war. Markets drop as European equities fall over 1%, U.S. stock futures weaken. Dollar weakens as Trump plans to increase tariffs on European goods. Euro, sterling, and Scandinavian currencies bounce back.

Market reactions to Trump’s threats are modest, with analysts predicting a de-escalation. Pending Supreme Court ruling on tariff legality and uncertainty on Europe’s response cloud the situation. EU may retaliate with tariffs against the U.S. or implement anti-coercion measures. Investors concerned about potential fallout.

European investors may hesitate to dump U.S. assets despite tensions. U.S. vulnerability to foreign outflows a concern. European countries own $8 trillion in U.S. equities and bonds. Analysts unsure if European investors will sell. Market backdrop different from last April, challenging to diversify away from the dollar.

Uncertainty reigns as European investors weigh selling U.S. assets. Limited options for the EU to force sales, may incentivize euro investments. Dollar has stabilized after a 10% drop in 2025. Investors cautious amid shifting sentiment. U.S. stocks lag global market performance. Appetite for diversification remains strong.

Trump’s tariff threats add to uncertainty for Europe’s economy. UK and Germany most exposed to increased U.S. tariffs. Potential 25% tariff could impact output. German investment in U.S. cut in half due to trade uncertainty. Economists warn of larger economic impact and potential EU retaliation. Investors cautious amidst economic fragility.

Read more at Yahoo Finance: ANALYSIS-Trump’s Europe tariff threat over Greenland revives talk of ‘Sell America’ trade