- The renewed US push to acquire Greenland marks a sharp escalation in confrontational foreign policy, unsettling NATO allies and challenging long standing global norms.
- European states have responded with rare unity, resisting pressure and tariff threats, whilst financial markets initially reacted with a weaker dollar, a bond sell off, volatile equities and a renewed surge in safe haven assets such as gold.
- Our portfolios remain well positioned, with a cautious stance on US assets and the dollar, and greater exposure to regions and markets that benefit from dollar weakness that have shown resilience amid geopolitical upheaval.
In what can only be described as an extraordinary bout of foreign policy antagonism, the Trump administration has turned its attention to acquiring Greenland. Buoyed by a recent and highly controversial intervention in Venezuela, the White House has revived the idea that Greenland, an autonomous territory within the Kingdom of Denmark, should be transferred to US control. This time, however, it has not been floated as an idle curiosity, but as a serious demand.
European leaders have been visibly rattled. Trump has framed the issue as fair compensation for the United States underwriting NATO, arguing that Europe has failed to pull its weight militarily. On this point, he may not be entirely wrong. Politicians have run defence capabilities across Europe and the UK down to the point of impotency since the end of the Cold War, and even more so after the 2008 financial crisis. That alone does not explain the sudden urgency or aggression of the Greenland gambit, however.
Why Greenland, of all places?
The official justification offered by President Trump is that Greenland cannot be adequately defended by Europe, and that Russian and Chinese activity in the Arctic demands US ownership of the island1. This argument does not stand up to scrutiny. Greenland already sits under NATO’s collective defence umbrella, including the United States itself. The US has long maintained military bases on the island and has the ability to expand its presence there as it sees fit. Russia lacks the naval capacity to project force across the Arctic in any meaningful way, and China’s involvement remains economic and limited. Greenland is not undefended, nor is it on the brink of invasion.
A more plausible explanation lies in legacy and ideology. Trump has repeatedly shown a desire to be remembered as a transformational President, and the acquisition of Greenland would be a dramatic expansion of US territory on the eve of America’s 250th anniversary. It would invite comparison with Thomas Jefferson’s Louisiana Purchase in 1803 and cement Trump’s place in the historical canon. This thinking also aligns neatly with a revival of the Monroe Doctrine, the 19th century policy that asserted US primacy across the Western Hemisphere. Control of Greenland, alongside heavy-handed influence over Venezuela and threats directed at Canada, would represent a far more aggressive interpretation of that policy. More broadly, it suggests a world view in which great powers carve the globe into spheres of influence and expect smaller states to acquiesce.
A third argument centres on Arctic trade routes. As ice recedes, the Northwest Passage will one day provide a shorter shipping route linking Europe, North America and Asia. It has therefore been mooted that Greenland’s location would make it strategically valuable in controlling access to this corridor. However, this theory quickly falls apart. The United States already controls far more critical geographic choke points through Alaska and the Bering Strait, which at its narrowest is barely fifty miles across from Russia. If maritime control were the true objective, Greenland is important, but far from critical.
The European response
The response from Europe has been firmer and more unified than many expected. EU leaders have closed ranks behind Denmark, rejecting outright the idea that Greenland is for sale and condemning the use of economic and militaristic threats against allies. Trump responded by threatening additional tariffs of 10% on a broad range of European exports, rising sharply to 25% later in the year2. These measures, since walked back, were designed to apply economic pressure where diplomacy-via-Twitter failed3.
More extreme responses have been floated only by hawkish commentators, rather than policymakers. The idea that Europe might sell large quantities of US Treasuries to punish Washington has been widely discussed in the media4, but it would amount to a financial nuclear option that would harm Europe at least as much as the US. It remains vanishingly unlikely.
European leaders will now be keen to learn the deal arranged between Trump and Mark Rutte, NATO secretary general, which caused Trump to back down on his demands.
The response in financial markets
The US dollar weakened markedly against major peers5 as investors reassessed political risk and the potential economic impact of tariff escalation and fracturing alliances. US Treasuries sold off as global holders adjusted positions amid uncertainty about future US financing costs and confidence in US stability.
Stock markets were volatile around the tariff news. On the worst days, major indices such as the US large cap index fell by more than 2% as tariff threats rattled confidence and raised the prospect of renewed trade friction with Europe. European markets also fell, though losses were less dramatic, particularly in the UK. Following Trump’s speech at Davos on Wednesday, these losses stemmed, and then rapidly reversed6, as the White House adopted a more measured tone and explicitly ruled out the use of force and tariffs – having threatened both just hours before.
Safe haven assets responded in predictable fashion. Gold and silver soared to record levels, reflecting investor flows out of risk assets and into traditional havens amid heightened geopolitical risk. Gold has climbed over 12% in January7, a further leg up over the already staggering run it enjoyed in 2025, though this invites further questions about the lofty price and the implicit risk this presents.
Bowmore Portfolios
With global norms as thoroughly abnormal as they are, the only real constant is the reliable unpredictability of the news cycle and of policy coming out of the White House. For that reason, and for a range of other equally important economic considerations, we continue to manage the Bowmore portfolios with a more negative view on United States assets and the US dollar than many of our peers.
That positioning has proved helpful so far this year and all of last. Our portfolios carry higher weightings to regions that tend to benefit from a weaker dollar, including Emerging Markets, Japan and broader Asia, which have already delivered returns of more than 6% year to date8. These allocations have been supported both by currency moves and by improving fundamentals outside the US. We have also very recently added a deep value fund, intended to diversify our equity exposure even further through its investment in undervalued companies and sectors predominantly outside the US.
In addition, our significant allocation to UK-listed companies has provided a further tailwind. The UK market has shown relative resilience to Trump-induced volatility, particularly when compared with European and American peers, reflecting its sector mix and lower sensitivity to global trade disruption.
It is important not to become overly fixated on headlines that are shifting by the day. Attempting to respond tactically to every political flashpoint would be both impractical and unwise. Instead, we remain focused on our long-term views across markets, regions, asset classes and currencies, and we will continue to apply that discipline as the news cycle inevitably moves on to the next episode.
Source: Alpha Terminal
Data as at 22/01/2026
The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a guide to future performance.
Sources:
[1] Truth Social
[1] Financial Times
[1] Bloomberg News
[1] Deutsche Bank
[1] Trading Economics, Bloomberg
[1] Trading Economics
[1] LBMA Daily Trade Reporting Data
[1] AM Insights