Trump’s Tariff Threats Dominate Davos Agenda—Global Markets Brace for Impact

Davos chatter pivots from blockchain to barriers as Trump's tariff revival overshadows the World Economic Forum.

The Protectionist Shadow Over Globalization

Forget digital gold—the talk in Alpine corridors centers on trade walls. The former president's renewed tariff threats cut through the usual sustainability and innovation scripts, refocusing elite discussions on potential economic fragmentation. Global supply chains, already strained by pandemic aftershocks, face another stress test.

Markets Eye the Fallout

Traditional finance scrambles to model scenarios, while decentralized assets watch from the sidelines—yet again proving their detachment from legacy political theatrics. The threat triggers volatility in currency and commodity markets, as analysts dust off 2018-2019 playbooks. One cynical fund manager quipped, 'Central banks will print, politicians will tax, and we'll hedge with assets they can't freeze.'

A New World Disorder

The agenda hijack signals a stark reality: geopolitical risk is back as the prime market mover. Whether these threats materialize or not, the mere specter reshapes capital allocation and corporate strategy for the coming quarter. In an era built for borderless digital value, the old ghosts of protectionism just got a major platform.

US tariff threats cause the euro and pound to weaken against the dollar

Trump’s tariff threats have reverberated through financial markets, weakening the euro and the British pound against the US dollar in Monday morning’s trading session. Several economists believe the trade conflict could hurt export-heavy economies like the United Kingdom and Germany. 

EUROSTOXX 50 futures and Germany’s DAX futures both dropped 1.1%, while Japan’s Nikkei index fell 1% in Asia as traders digested the implications of a possible trade showdown.

“Hopes that the tariff situation has calmed down for this year have been dashed for now, and we find ourselves in the same situation as last spring,” said Berenberg chief economist Holger Schmieding.

In London, ministers said they wanted to avoid a spiral of retaliation to keep the UK’s trade agreements with Washington, reached last year, intact. UK Chancellor Rachel Reeves is scheduled to attend the forum on Tuesday, where she is expected to hold talks with counterparts and business leaders on the sidelines.

Italy’s Prime Minister Giorgia Meloni said she had raised her objections directly with the US president and told him tariffs are a “mistake.”

“I wanted to tell you that the provision for an increase in tariffs against those nations that have chosen to contribute to Greenland’s security is, in my opinion, a mistake, and obviously, I do not agree with it. I agree with what Donald Trump said a few hours ago, to whom I spoke my mind and heard the NATO Secretary General confirm to me a job that NATO is starting to do from this point of view,” Meloni said.

Denmark’s Foreign Minister Lars Lokke Rasmussen, representing the country with sovereignty over Greenland, told the BBC that there was a “fundamental disagreement” with the United States during their talks at the WHITE House last week. 

Rasmussen said the US president was insisting on “conquering” Greenland, a position his country is vehemently against. “We made it very, very clear that this is not in the interest of Denmark. It’s productive to start discussions at a high level,” he surmised.

Other European Union member states have coined the tariff threats “economic blackmail,” with French delegates saying on Sunday that Europe could escalate the tussle if necessary.

Liberation day jitters crawl back into European business sentiment

Much like Trump’s “Liberation Day” tariffs in April 2025, which also caused a price slump in crypto and global markets, bitcoin has shed over 2% of its price and dropped back down to $92,900. 

US markets are closed on Monday for Martin Luther King Jr. Day. However, in early Asian trading, stock futures were down 0.7%, while 10-year futures edged higher by a percentage point.

Trump has also insinuated he may intervene in unrest in Iran, which may have compounded investor unease and pushed gold a step closer to its all-time high, now changing hands at $4,670.

Some analysts note that markets have adapted to a steady stream of geopolitical shocks, and investors may have learned to discount the most extreme outcomes.

“Investor sentiment is that Trump just ‌won’t be able to do all of the things that he talks about, and that won’t MOVE the needle on asset prices,” said Fordham Global Foresight founder Tina Fordham.

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