Wall Street sinks as Trump threatens 8 European countries with tariffs
over Greenland
[January 21, 2026] By
DAMIAN J. TROISE
NEW YORK (AP) — Stocks slumped on Wall Street Tuesday after President
Donald Trump threatened to hit eight European countries with new tariffs
as tensions escalate over his attempts to assert American control over
Greenland.
The losses were widespread, with nearly every sector losing ground.
Major indexes in the U.S. extended losses from last week in what has
been a wobbly start to the year.
The S&P 500 fell 143.15 points, or 2.1%, to 6,796.86. It is the steepest
drop for the benchmark index since October.
The Dow Jones Industrial Average fell 870.74 points, or 1.8%, to
48,488.59. The Nasdaq composite fell 561.07 points, or 2.4%, to
22,954.32.
Technology stocks were the heaviest weights on the market. Nvidia, one
of the most valuable companies in the world, plunged 4.4%. Apple fell
3.5%.
Retailers, banks and industrial companies also fell sharply. Lowe’s fell
3.3%, JPMorgan Chase fell 3.1%, and Caterpillar lost 2.5%.
European markets and markets in Asia fell. Long-term bond yields in
Japan rose to record levels on concerns over the government’s fiscal
policy, adding to anxiety in global markets.
Trump’s trade policy has roiled markets since the start of his second
term. Stocks have sold off on the threat of steep tariffs, then rallied
when Trump delays or cancels a tariff, or negotiates a lower rate.
Trump said Saturday that he would charge a 10% import tax starting in
February on goods from Denmark, Norway, Sweden, France, Germany, the
United Kingdom, the Netherlands and Finland. The annual combined imports
from European Union nations are greater than those from the top two
biggest individual importers into the U.S., Mexico and China.
Gold prices surged 3.7% and silver prices soared 6.9%. Such assets are
often considered safe havens in times of geopolitical turmoil.
The trade tensions apparently short-circuited a recent rally in bitcoin.
The cryptocurrency rose above $96,000 late last week but has dropped
back to around $89,700.
Treasury yields were mixed in the bond market. The yield on the 10-year
Treasury rose to 4.29% from 4.23% late Friday. The yield on the two-year
Treasury held steady at 3.60% from late Friday.
Companies that focus on consumer staples held up better than most of the
market. Colgate-Palmolive rose 1.1% and Campbell’s rose 1.5%.
The price of U.S. crude oil rose 1.5% to $60.34 per barrel. The price of
Brent crude, the international standard, rose 1.5% to $64.92.
Trump linked his aggressive stance on Greenland to last year’s decision
not to award him the Nobel Peace Prize, telling Norway’s prime minister
that he no longer felt “an obligation to think purely of Peace,” in a
text message released Monday.
Trump’s message to Jonas Gahr Støre appeared to ratchet up a standoff
between Washington and its closest allies over his threats to take over
Greenland, a self-governing territory of NATO member Denmark.
[to top of second column] |
Off The Hook Yachts President Jason Ruegg gavels trading closed at
the New York Stock Exchange, Tuesday, Jan. 20, 2026. (AP
Photo/Richard Drew)
 Trump’s threats have sparked outrage
and a flurry of diplomatic activity across Europe, as leaders
consider possible countermeasures, including retaliatory tariffs and
the first-ever use of the European Union’s anti-coercion instrument.
The trade and political conflict with Europe is heating up just as
world leaders meet at the World Economic Forum annual meeting in
Davos, Switzerland this week. Wedbush Securities analyst Dan Ives
said the new tariff threat “is clearly an overhang on the
conference,” but that it would likely simmer over time.
“Our view is just like over the last year the bark will be worse
than the bite on this issue and tariff threats as negotiations take
place and tensions ultimately calm down between Trump and EU
leaders,” Ives wrote in a note to clients.
Tariffs threaten to boost inflation, although so far the increases
have been less than many experts feared. Still, the threat of
tariffs reigniting already high inflation could further complicate
the Federal Reserve’s job.
The central bank cut its benchmark interest rate three times late in
2025 to help bolster the economy as the job market weakened. The Fed
has taken a more cautious view because of the risk of rising
inflation, which remains above its target of 2%.
Lower interest rates on loans can help bolster economic activity,
but they could also fuel inflation, which could counter any benefit
from lower interest rates.
The Fed, and Wall Street, will get another update on inflation on
Thursday, when the government releases the personal consumption
expenditures price index, or PCE. It is the Fed’s preferred measure
for inflation.
The Fed will meet next week for its policy meeting on interest rates
and Wall Street is betting that the central bank will hold its
benchmark interest rate steady.
Wall Street is also in the midst of the latest round of corporate
earnings, which could help provide more insight into how companies
are handling uncertainty from tariffs, geopolitics and cautious
consumers.
Industrial and consumer conglomerate 3M slumped 7% after reporting
mixed results for its most recent quarter. Companies from a wide
range of industries will report their results this week, including
Johnson & Johnson, Halliburton and Intel.
___
AP Business Writers By Yuri Kageyama and Matt Ott contributed to
this report.
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