DAVOS, SWITZERLAND – JANUARY 21: Delegates watch as U.S. President Donald Trump speaks onstage at the World Economic Forum (WEF) on January 21, 2026 in Davos, Switzerland.
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Markets and some European leaders welcomed the news that U.S. President Donald Trump was standing down from imposing further tariffs on European countries — but others were left bewildered.
Trump told CNBC on Wednesday that he had the “concept of a deal” with NATO Secretary-General Mark Rutte, shortly after declaring on Truth Social that he would not proceed with the levies he threatened on eight European countries from Feb. 1.
Markets on Thursday rose on the news, but questions remain about the supposed agreement on Greenland.
As the president didn’t share details of the framework — or who agreed to it — one strategist told CNBC: “Nobody’s going to believe him anymore.”
A ‘deal’ without a deal
Trump outlined the Greenland agreement in sweeping terms, casting it as an “ultimate long-term deal” that locks in U.S. national security and gives access to “minerals.”
Greenland’s location matters for Arctic military posture, but climate change is making the island more accessible — sparking a renewed interest in its rare earths and other critical mineral reserves.
But Trump did not say whether Denmark, which is responsible for the island’s defense, or Greenland had signed up to anything.
Rutte told Fox News that the issue of Greenland’s ownership did not come up in his talks with Trump, which were about Arctic security as Chinese and Russian activity increases.
Ed Price, senior non-resident fellow at New York University, told CNBC on Thursday that striking a deal “requires two people to tango,” describing Trump’s speech at the World Economic Forum in Davos, Switzerland, as “a monologue not a dialogue.”
Price also said the framework was “the start of a process, not the end,” warning that a precedent of bargaining over disputed territories could tempt future attempts elsewhere.
Chinese state media, meanwhile, urged the European Union on Wednesday to reassess its security reliance on the U.S. and pursue greater “strategic autonomy.”
Trump has “advantaged” China in the long run by signaling that U.S. commitments can swing wildly with political incentives, Price added.
Why Trump blinked: Treasury yields
Robin Brooks, a senior fellow at the Brookings Institution, said Trump’s toned-down rhetoric had “nothing to do with Europe” and was more likely driven by concerns about the recent spikes in global bond yields, which jumped on fears of a fresh trade war.
Brooks also said Europeans had limited leverage in negotiations with Trump.
“Europeans have, by all accounts, been freeriding on the U.S. security umbrella. They need to spend more. They will,” Brooks said, caveating that most countries, except for Germany, lack fiscal space. “A lot of these countries have no fiscal firepower whatsoever,” he told CNBC’s “Squawk Box Asia.”
In his Wednesday speech at Davos, Trump acknowledged financial markets’ discomfort with his threats over Greenland as he publicly ruled out using force to take it for the first time.
‘The biggest taco that you could get’
Whatever ultimately happens with tariffs, European leaders should plan for worst-case outcomes, said David Roche, veteran investor from Quantum Strategy.
Trump’s Greenland threat is “the biggest ‘taco’ that you could get,” Roche said, referring to the phrase “Trump Always Chickens Out,” which has come to define a market strategy anticipating the president reneging on his threats.
But Roche said this was becoming a problem — the bigger Trump’s threat, the more allies expect him to “march his troops up the hill and then down the hill.”
“What the European Union has learned is that if you face up to them, you win,” Roche said. “Nobody’s going to believe him anymore.”
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2026-01-22 08:13:23
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