Trump to Impose Tariffs on Europe to Take Greenland. Gold and Silver Hit New Highs but Rally May Have Only Just Begun

TradingKey - On Saturday (17th) ET, U.S. President Trump stated that until the acquisition of Greenland is approved, the U.S. will impose additional tariffs on imports from European countries that oppose the acquisition.

Trump posted on Truth Social that, effective February 1, a 10% import tariff will be imposed on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, with the rate increasing to 25% starting in June.

The move bolstered the market's safe-haven demand for precious metals. On Sunday ET, spot gold hit a record high of $4,690, rising more than 2% intraday; spot silver broke above $94 per ounce, also reaching a historic high, with an intraday gain of over 4%.

The History of the Battle for Greenland

This is not the first time Trump has "talked tough" regarding the ownership of Greenland. During his first presidential term in 2019, he first proposed the idea of the U.S. taking over Greenland. Trump once stated that Greenland is vital to U.S. security and that the U.S. must own it.

Greenland is home to a large U.S. Air Force base, and the shortest route from Europe to North America passes through here, making the region significant for the U.S. military and ballistic missile early warning systems. Recently, Trump has also repeatedly stated that Greenland is surrounded by Russian and Chinese warships, an assertion that Denmark has denied.

Reportedly, Greenland's rare earth metal reserves are approximately 40 million tons, with 300,000 tons of uranium—resources the U.S. urgently needs.

Trump stated that unless a comprehensive agreement for the acquisition of Greenland is reached, the tariffs will remain in effect.

Currently, Denmark has launched the "Arctic Endurance" military exercise in Greenland, with several European countries participating. Eight nations—Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the UK—issued a joint statement accusing the U.S. of imposing tariffs. Several EU countries are discussing countermeasures against Trump's tariffs, including imposing additional tariffs on ‐93 billion worth of U.S. exports to Europe, or restricting U.S. companies' access to the EU market, etc.

Gold and Silver Surge to New Highs, but the Rally Has Just Begun

Analysts at Capital.com stated that as geopolitical risks continue to escalate, new trade uncertainties have undermined economic growth prospects; U.S. foreign policy is also eroding market confidence in the U.S. dollar. These two factors are a major boon for gold and silver, explaining the recent surge in their prices.

But this rally is likely only just beginning. Holger Schmieding, chief economist at Berenberg Bank, said that while people had hoped the tariff situation would calm down this year, those hopes have been dashed, and we are back to the situation of last spring.

Jacob F. Kirkegaard, a senior fellow at the Bruegel Institute in Brussels, believes the U.S. and Europe could fall into a full-scale trade war, where European countries will either through a trade war fight back, or be drawn into a more serious military conflict .

Carsten Nickel, deputy director of research at consultancy Teneo, believes the sudden imposition of high tariffs by the U.S. has led the market to a direct conclusion: Agreements reached with the U.S. government can hardly provide long-term certainty.

Christopher Hodge, chief U.S. economist at Societe Generale, pointed out that if the U.S. takes Greenland by force, it could trigger a rush into U.S. Treasuries in the short term, while European sovereign bonds are sold off; the dollar and Treasuries would benefit from safe-haven inflows. However, if U.S.-Europe relations break down, concerns over the dollar's status could resurface.

Kallum Pickering, chief economist at London-based independent investment bank Peel Hunt, said that if the conflict escalates, the market may become more concerned about the damage to U.S. policy credibility, and the dollar will also face greater downward pressure. As one of the most important safe-haven assets, when its credibility is damaged, capital tends to flow out of dollar assets, and gold becomes the best alternative.

For silver, which is also a safe-haven asset, the metal itself has faced a supply gap for years. If geopolitical fragmentation disrupts cross-border flows, the combination of structural shortages and intensified safe-haven sentiment could trigger a frantic rally.

Idanna Appio of First Eagle Investment Management stated that rule-breaking by the U.S. could trigger asset allocation adjustments, leading capital to flow back to Europe and Asia.

This attempt by the U.S. to acquire Greenland could have deeper consequences than expected, affecting not only NATO but also relations in other regions. Analysts pointed out that if the U.S. forcibly takes Greenland, it would not only end the NATO military alliance, but also impact the international balance of power. Stephen Kolano, Chief Investment Officer at Integrated Partners, said this could end the post-WWII Bretton Woods II system, the global order established during the formation of NATO.