US Stocks Advance as White House Averts EU Tariffs Over Greenland
President Trump halts threatened tariffs on major European economies, citing a new 'framework' deal that eases transatlantic trade tensions and buoys investor sentiment.
Global markets rallied on Wednesday after the White House announced it would suspend planned tariffs on the European Union, pulling back from a brewing trade conflict centered on the sovereignty of Greenland. The move removes a significant headwind for investors, who had been bracing for a new front to open in global trade disputes.
President Donald Trump confirmed the decision, citing progress on a new 'framework' deal with European nations. "They are talking to us, we have a framework, and we will see what happens," Trump stated. The de-escalation comes after a tense period where the administration had threatened escalating duties on major European trading partners.
Fears of a transatlantic trade war had reignited in mid-January after President Trump threatened to impose tariffs of 10% on goods from at least eight European countries, including Germany, France, and the United Kingdom. The proposed duties, related to a diplomatic dispute over Greenland, were set to take effect on February 1st and potentially rise to 25% by June, according to reports from earlier this month. The threat had sent a chill through global stock markets and prompted warnings from Brussels of significant retaliatory measures.
The European Union had been preparing a potential counter-tariff package valued at over €90 billion and had activated its Anti-Coercion Instrument (ACI), a mechanism designed to respond to economic intimidation. The escalating tensions also led the European Parliament to stall a previously agreed-upon US-EU trade pact from August 2025, jeopardizing efforts to lower transatlantic trade barriers.
News of the truce provided immediate relief to markets on both sides of the Atlantic. In the U.S., the S&P 500 and the Dow Jones Industrial Average posted modest gains in morning trading. The relief was more pronounced in Europe, where the Stoxx Europe 600 index advanced, led by gains in the auto and luxury goods sectors, which were considered primary targets for the proposed U.S. tariffs. Volkswagen AG, for instance, had separately reported better-than-expected cash flow, and the easing of tariff risks provided a further tailwind for the sector.
While details of the 'framework' deal remain sparse, the immediate effect is a restoration of a tentative status quo in US-EU trade relations. The move averts, for now, what could have been a damaging and costly conflict for the global economy. However, some diplomatic friction remains. The Wall Street Journal noted that leaders from other involved nations, including the UK, have maintained a firm public stance on their positions. This suggests that while the immediate economic threat is paused, the underlying geopolitical issues are not fully resolved.
For investors, the development removes a key source of market uncertainty that had been clouding the start of the year. The focus now shifts to the substance of the new framework and whether it can provide a lasting resolution to the trade and sovereignty issues that have recently strained the transatlantic alliance.