Gold and silver surged to record highs on Monday, while global stock markets slid after former US President Donald Trump reignited trade war fears, threatening tariffs against several European countries over their opposition to the United States purchasing Greenland.
Trump has intensified geopolitical tensions this month by insisting that Washington must take control of the strategically located North Atlantic island, citing US national security interests.
After talks failed to resolve what he called a “fundamental disagreement” with Denmark over the autonomous territory, Trump announced plans to impose new tariffs on eight European countries.
Under the proposal, 10% tariffs would be imposed from February 1, rising to 25% from June 1, on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland unless they agree to his demands.
The announcement triggered immediate backlash. In a joint statement, the affected countries warned that tariff threats risk damaging transatlantic relations and could spark a “dangerous downward spiral”.
Germany’s Foreign Minister Johann Wadephul said the move also jeopardised a trade agreement signed last year between the United States and the European Union, adding that its continuation now appeared unlikely.
French President Emmanuel Macron’s aides said Paris may urge the EU to activate its “anti-coercion instrument”, a never-before-used measure that allows restrictions on imports of goods and services into the 27-nation bloc, home to around 450 million people.
According to Bloomberg, EU member states are also discussing potential retaliatory tariffs on €93 billion ($108bn) worth of US goods.
The escalating trade tensions rattled global markets, pushing investors toward safe-haven assets already buoyed by Trump’s recent threats against Iran and political instability in Venezuela.
Gold climbed to a record $4,690.59 per ounce, while silver jumped to $94.12.
Asian stock markets largely declined, with losses seen in Tokyo, Hong Kong, Shanghai, Sydney, Singapore and Wellington, while Seoul and Taipei posted modest gains. European and US futures also fell sharply.
The US dollar weakened, while the euro, pound sterling and Japanese yen gained ground.
Charu Chanana, chief investment strategist at Saxo Markets, said investors were closely watching whether the rhetoric would turn into concrete policy.
“Even if the immediate tariff threat is negotiated down, the long-term risk is rising fragmentation, politicised trade, and higher uncertainty for businesses and investors,” she said.
Meanwhile, markets largely ignored fresh data showing China’s economy grew 5% last year, meeting official targets, though growth slowed significantly in the final quarter.
Investors in Seoul and Taipei also brushed off comments from US Commerce Secretary Howard Lutnick, who warned that South Korean and Taiwanese chipmakers could face 100% tariffs if they fail to expand manufacturing operations in the United States.