Wall Street Was Not Ready For Trumps Next Move

President Trump’s bold tariff threats on European nations over Greenland have triggered a massive Wall Street selloff, erasing early 2026 gains and raising alarms about global trade stability.

Story Snapshot

S&P 500 plunged 2.06% on January 21, 2026, the largest drop since October 2025, wiping out all first-three-week gains.
Trump threatened 10% tariffs on eight European countries starting February 1, escalating to 25% in June unless Greenland deal is reached.
Technology stocks led losses at -2.89%, while energy held firm, showing investor shift to defensive assets.
White House defends pro-growth agenda amid expert warnings of self-harm and market volatility.

Market Plunge Details

On Tuesday, January 21, 2026, US equity markets suffered broad declines after President Trump threatened tariffs on Denmark, Norway, Sweden, France, Germany, UK, Netherlands, and Finland. The Morningstar US Market Index fell 2.02%, S&P 500 dropped 2.06%, Nasdaq tumbled 2.39%, and Dow shed over 870 points. Technology and consumer cyclical sectors bore the heaviest losses at -2.89% and -2.71%. This reaction erased all gains from the year’s first three weeks, marking the sharpest single-day drop since October 10, 2025.

Trump’s Greenland Strategy

Trump announced the tariff threats on January 18, 2026, reviving his long-standing ambition to acquire Greenland from Denmark, now using trade leverage. Tariffs start at 10% on February 1, rising to 25% by June without agreement. At a White House press conference, Trump expressed confidence EU investments would continue, dismissing retaliation fears and framing the push as NATO-strengthening. This follows 2025’s EU trade deal with major commitments, now at risk from escalation.

Historical patterns show Trump often proclaims tariffs then reverses amid market pressure, as in April 2025 when bond volatility prompted a pause. Supreme Court reviews tariff legality under the International Emergency Economic Powers Act add uncertainty. European Commission President Ursula von der Leyen called the threats a “mistake” breaching the trade deal, with EU retaliation plans underway.

Expert Views and White House Response

Michael Field of Morningstar labeled the escalation “self-harm” after 2026’s strong start. Hank Smith of Haverford Trust predicts short-term pain but recovery, citing Trump’s reversal history if bond yields keep rising. Henry Cook of MUFG urges calm, noting markets overlearned not to panic last year. Paul Christopher of Wells Fargo says foreign investors hedge amid tariff unpredictability. White House Spokesperson Kush Desai highlights 10%+ S&P gains year-to-date, falling yields, GDP acceleration, cooled inflation, and a dozen trade deals as proof of policy success.

Defensive sectors proved resilient: energy dipped just 0.29%, consumer defensive rose 0.09%. Internationally, Nordic Index fell 3.1% weekly, Europe 2.5%. Treasury 10-year yields hit 4.3%, dollar weakened, euro strengthened to $1.17, and gold/silver reached records. US consumers face higher European import costs in autos, pharma, machinery; corporations risk retaliation on exports. Long-term, trade ties could fray, slowing growth despite pro-America-first goals.