President Donald Trump said that he backed away from a planned tariff increase against eight European countries. He claimed this change was linked to what he called “the concept of a deal” related to Greenland. This shift sparked a global rebound in stocks and revived a nickname for his trade threats on Wall Street.
Speaking to CNBC’s Joe Kernen at the World Economic Forum, Trump explained that he decided against the tariffs because he now saw a way to reach an agreement involving Greenland. This came after weeks of attempts to bring the Danish territory under U.S. control.
Trump had previously announced a 10% import tariff set to start on February 1 for goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain. He mentioned this rate would increase to 25% on June 1 if those countries resisted his push for Greenland.
Markets plummeted on Tuesday as investors prepared for a renewed trade fight. There were declines across U.S., European, and Asian stocks, increased demand for safe assets, and pressure on risk-sensitive currencies. After the president announced in Davos that he would drop the February 1 tariff plan, global shares bounced back on Wednesday and continued to rise on Thursday. U.S. equity indexes increased alongside European stocks, and the dollar eased.
The renewed rally brought back traders’ shorthand “TACO,” which stands for “Trump Always Chickens Out.” Some investors use this term to describe how tariff threats affect markets before being softened or dropped.
Trump’s change of heart came after Europe signaled it would respond to new tariffs. Time reported that European leaders prepared countermeasures as Trump linked trade penalties to Greenland and framed the dispute as a test of U.S. security interests in the Arctic.
The president mentioned he had reached a “framework of a future deal” involving Greenland after discussions in Davos with NATO Secretary General Mark Rutte. However, he provided few details. According to Reuters, Trump dismissed the idea of seizing Greenland by force during his remarks in Davos, which also helped calm investors.
In market trading on Thursday, MSCI’s global equity index indicated a second consecutive advance. The euro rose against the dollar, and gold recovered from earlier losses. Reuters also reported that investors described the shift as a positive response after the previous session’s chaos. However, they noted that uncertainty remained high because Trump did not provide detailed terms of the Greenland framework he mentioned.
This episode contributed to a series of market fluctuations connected to Trump’s tariff threats and foreign policy disputes since he returned to office. Earlier this week, Reuters reported that Trump’s warnings about Greenland created new trade uncertainty and accelerated a global selloff before the later recovery.
Trump has argued that Greenland’s location in the Arctic is strategically important and that the United States should pursue control of the territory. Denmark and Greenland’s leaders have firmly rejected any sale, while European officials view U.S. pressure as a challenge to allied unity.
Trump did not clarify what he meant by “the concept of a deal” in the CNBC interview, and the White House did not immediately release a formal agreement text. He stated that work on the Greenland arrangement was still in progress after stepping back from the tariff threats.
