US futures sink after Trump warns of higher tariffs for 8 countries over Greenland issue

European markets and U.S. futures tumbled Monday following President Donald Trump’s unexpected announcement of a 10% tariff on imports from eight European nations, escalating tensions with key American allies over Greenland sovereignty claims.

European shares saw significant declines, with Germany’s DAX falling 1.3% to close at 24,960.33, while France’s CAC 40 dropped 1.9% to 8,101.96. Britain’s FTSE 100 showed more resilience but still declined 0.4% to 10,190.26.

U.S. markets were closed for Martin Luther King Jr. Day, but futures indicated sharp drops ahead, with S&P 500 futures down 1%, Dow Jones Industrial Average futures falling 0.8%, and Nasdaq composite futures dropping 1.2% as of late morning Eastern Time.

The market turmoil follows Trump’s Saturday announcement targeting Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland with a 10% import tax starting in February. The president cited their opposition to American control of Greenland as the justification for the new tariffs.

European leaders responded with an unusually forceful joint statement, condemning the tariff threat as undermining transatlantic relations and risking “a dangerous downward spiral.” The statement represents the strongest collective rebuke from European allies since Trump returned to office.

“Trump’s moves are testing the strategic alignment and institutional trust underlying support from Europe, the largest trading partner and provider of financing to the United States,” noted Stephen Innes of SPI Asset Management. He warned this isn’t merely a “short-term liquidation story” but a “slow rebalancing story” with far more consequential long-term implications for global financial markets.

The tariff announcement comes at a delicate moment for international trade relations and could potentially trigger retaliatory measures from the European Union, further straining economic ties between traditional allies.

Meanwhile, Asian markets showed mixed performance after China reported its economy expanded at a 5% annual pace in 2025, though growth slowed in the final quarter. Strong exports, despite previous U.S. tariff increases on Chinese goods, helped offset relatively weak domestic demand.

Hong Kong’s Hang Seng index lost 1.1% to 26,563.90, while the Shanghai Composite index gained 0.3% to 4,114.00. Tokyo’s Nikkei 225 declined 0.7% to 53,583.57 as Japanese Prime Minister Sanae Takaichi prepared to dissolve parliament for snap elections next month.

South Korea’s Kospi was a bright spot, jumping 1.3% to 4,904.66 on strong gains in technology companies, with chip manufacturer SK Hynix climbing 1.1%.

U.S. markets face a busy week ahead with a broad mix of corporate earnings reports from airlines, industrial companies, and technology firms. United Airlines, 3M, and Intel are all scheduled to release quarterly results in the coming days. These reports could provide investors with crucial insights into consumer spending patterns and business performance amid persistent inflation and higher tariffs.

The Federal Reserve will also receive new inflation data with the release of the personal consumption expenditures price index (PCE), its preferred inflation measure. The central bank’s next policy meeting is scheduled in two weeks, where it is widely expected to maintain current interest rates as it navigates a slowing job market against inflation that remains above its 2% target.

In commodity markets, oil prices stabilized after recent volatility triggered by widespread protests in Iran. U.S. benchmark crude rose 12 cents to $59.58 per barrel, while Brent crude, the international standard, added 5 cents to $64.17 a barrel.

Precious metals continued their upward trend, with gold gaining 1.8% and silver surging 6.2%, reflecting investor moves toward traditional safe-haven assets amid growing geopolitical and economic uncertainties.