Trump’s Greenland climbdown triggers relief but way forward unclear

By Agency Staff

Davos — US President Donald Trump’s abrupt climbdown on using tariffs as a weapon to seize Greenland brought relief on Thursday, but left uncertainty on ending a standoff that has risked the deepest rupture in transatlantic ties in decades.

A relief rally ensued across Europe and the UK’s blue-chip FTSE 100 was up 0.7% by 10.42am GMT, set to recoup most of the week’s losses. The domestically focused midcap FTSE 250 was up nearly 1.4%.

The pan-European Stoxx 600 climbed 1% by 8.02am GMT, regaining some poise after a revival of trade war jitters shaved 1.9% off the benchmark index over the week to Wednesday.

After weeks of threats, Trump stepped back from the threat of imposing tariffs on countries opposing his plans and ruled out using force, suggesting instead that a framework deal over the Arctic island is in sight.

Trump’s ambition to wrest sovereignty over Greenland from fellow Nato member Denmark has threatened to blow apart the alliance that underpinned Western security since the end of World War 2 and reignite a trade war with Europe.

After meeting with NATO secretary-general Mark Rutte, Trump said there could be a deal that satisfies his desire for a missile defence system and access to critical minerals while blocking what he said are Russia and China’s ambitions in the Arctic. But the exact nature of any deal was not immediately clear and Rutte, who met Trump at the World Economic Forum (WEF) in Switzerland, said they had not discussed whether Greenland would remain in Danish hands.

The framework deal on Greenland would require Nato allies to step up on Arctic security and the first results of this will be seen this year, Rutte told Reuters on Thursday. Rutte said in an interview on the sidelines of the WEF meeting in Davos it was up to Nato commanders to work through the details of extra security requirements and he was sure non-Arctic Nato allies would want to contribute to the effort.

“We will come together in Nato with our senior commanders to work out what is necessary,” Rutte said. “I have no doubt we can do this quite fast. Certainly I would hope for 2026, I hope even early in 2026.”

Red line

Danish Prime Minister Mette Frederiksen said Denmark and Greenland would continue to engage in constructive talks, provided there was respect for her country’s territorial integrity.

Her defence minister, Troels Lund Poulsen, later said Denmark has established a clear red line in discussions over Greenland, stating the country will not cede sovereignty. “After Wednesday’s meeting between Nato secretary general Mark Rutte and Donald Trump, we are in a much better place today than we were yesterday,” he said on X. “I am very happy about that.”

But Germany’s vice-chancellor, Lars Klingbeil, cautioned against premature optimism about the issue being solved. “It’s good they are engaged in dialogue, but we have to wait a bit and not get our hopes up too soon,” Klingbeil told Germany’s ZDF television on Wednesday night.

That echoed feelings among some residents in the Greenland capital, Nuuk.

“I’m very thrilled to hear that, first of all because he has been saying a lot of stuff about taking Greenland with force, like he’ll do it the hard way, which is so scary to hear,” said Ivi Luna Olsen, a tour guide.

“But I’m also keeping my hopes down and hoping for the best and preparing for the worst because sometimes he can be saying a lot of stuff.”

Addressing the issue for the first time in public, Russian President Vladimir Putin said on Wednesday that Greenland’s ownership was not Russia’s concern. China’s foreign ministry said on Thursday “the China threat” to Greenland was groundless.

EU retaliation

Trump’s push to seize Greenland has threatened to reignite a trade war with Europe that rattled markets and companies last year and prompted the EU to threaten retaliation.

There has also been concern the Greenland issue could cause a dramatic rift in Nato just as Ukraine and its allies need the US, Nato’s most powerful member, onside to end the war with Russia.

Ukrainian President Volodymyr Zelensky is due to meet Trump in Davos on Thursday, leaving behind an energy crisis in Ukraine, where Russian airstrikes against electricity infrastructure have left swathes of the capital and other regions without power.

Also speaking in Davos, German Chancellor Friedrich Merz welcomed Trump’s move, saying countries should not give up on Nato. “Despite all the frustration and anger of recent months, let us not be too quick to write off the transatlantic partnership,” he said.