WEF has its fair share of critics – a hot air playground for the rich and powerful, out of touch with the realities of life on Main Street, obsessed with ‘global dialogue’ and the ‘rules-based order’. The detractors charge sheet has a familiar ring. 

But when that rules-based order is itself under threat and crisis is in the air, this meeting in the mountains suddenly has a point.  

After the 2008 financial crash, and with Western capitalism on the brink of seizure, the sessions buzzed as banking leaders, including Jamie Dimon, chief executive of JPMorgan, and Bob Diamond, chief executive of Barclays, clashed with presidents and prime ministers. I was in the main congress arena in 2011 when Dimon insisted that the regulatory rection of governments had gone too far (“Too much is too much” he said) only to be slapped down by Nicolas Sarkozy, then president of France, direct from the public stage. It was a row for the ages. 

I have been coming to Davos for 16 years, and this year is the most reminiscent of those post-credit-crunch flare-ups when the very fundamentals of capitalism were being questioned. This time, it is the international order and the ability of the West to hang together in the face of glaringly different approaches to an intense series of risks. 

President Donald Trump, here for the first time since 2020, will dominate. On Gaza, Venezuela, Ukraine and most shockingly for Europe, Greenland, the president has thrown multiple boulders into a diplomatic sea already frothing with sharks. 

At the weekend, he threatened to impose increased tariffs on those who stand in the way of the US annexation of Greenland (a self-governing island and part of Denmark)—10% now, rising to 25% in June. France, Germany, the U.K., the Netherlands, Denmark, Norway, Sweden, and Finland, who have all been critical, are his target. 

The European Union has responded, signaling a new trade war between two of the world’s most powerful economies. Emannuel Macron, president of France, has demanded that the EU use its ‘anti-coercion instrument’ for the first time, a trade weapon brought in to defend EU member states against Chinese tariffs in 2023. In Brussels, talk is of €93bn ($108bn) of new levies and restrictions on American companies trading in the EU. European indices are sliding. The price of gold—a hedge against market risk—has risen to new highs. 

Ursula von der Leyen, the President of the European Commission, speaks tomorrow and Trump is due on Wednesday, with the largest American contingent ever to visit the World Economic Forum – including five Cabinet Secretaries and hundreds of officials. Multiple bilateral meetings aimed at finding a solution to the increasingly fraught war of words are being hurriedly arranged. 

“Territorial integrity and sovereignty are fundamental principles of international law,” von der Leyen said over the weekend. “They are essential for Europe and for the international community as a whole. Tariffs would undermine transatlantic relations and risk a dangerous downward spiral.” 

I was at Davos in 2017 when Xi Jinping spoke of the value of free trade. And in 2018, when Trump reassured the audience that America First did not mean America Alone. In 2026, Trump will again dominate, a president in a hurry to reshape the global order. How Europe acts now will set the tone for the rest of his presidency. Can a defense deal on Greenland be done, satisfying Trump’s demands for greater security? Will he follow through on the new tariffs? Will the EU accelerate its retaliation?  

For many at the World Economic Forum this week, it seems almost preposterous to be writing such sentences. We are in uncharted territory. 

Late last night Trump posted again on social media, “NATO has been telling Denmark, for 20 years, that ‘you have to get the Russian threat away from Greenland.’ Unfortunately, Denmark has been unable to do anything about it. Now it is time, and it will be done!!!”

Traders, dismayed at the prospect of a renewed trade war between the U.S. and Europe, reacted by driving down equities all over the world.

S&P 500 futures were down 1.12% this morning—an unusually steep drop. The last session closed flat. (Markets in the U.S. are closed for Martin Luther King Jr. Day.) The STOXX Europe 600 fell 1.25% in early trading, the U.K.’s FTSE 100 was down 0.49% before lunch. Japan’s Nikkei 225 was down 0.65%. China’s CSI 300 was flat. India’s NIFTY 50 was down 0.42%. Bitcoin declined to $93K. The only major national index having a good day was South Korea, where the KOSPI rose 1.32%.

Gold, the traditional safe-haven investment, hit a new record high of $4,673.4, on the Comex continuous contract.  

Wall Street’s analysts are broadly agreed that President Trump’s repeated threats to force Denmark to “give back” Greenland and to impose an escalating series of trade tariffs on the U.K. and E.U. if those countries don’t comply are bad for equities globally. They differ only in their assessment of how bad this will get.

ING’s Carsten Brzeski and Bert Colijn told clients, “Overall, we can only repeat our earlier estimates that additional tariffs of 25% would probably shave 0.2 percentage points off European GDP growth. However, this model-based estimate definitely falls short in capturing the full impact of new uncertainty and geopolitical tensions as a result of escalated tensions.”

They also cautioned, “As has been the case before, it is not exactly clear how this will work out as there has been no official communication from the White House, yet, just Trump’s announcement on social media.”

The pair also warned that Trump may be underestimating how resistant Europe is going to be. “While Europe, at least initially, seems to be determined to stand up against the latest tariff threat and the U.S. President’s claims on Greenland, the reality is that Europe is still dependent on the U.S. in many ways, both from an economic and security point of view. This was likely one of the central reasons behind the E.U.’s agreement last summer to agree to a trade deal with the U.S. that did not benefit Europe. Whether the new tariff threat and the situation in Greenland turn out to be the tipping point that finally triggers European unity and Europe’s rise as a geopolitical power remains to be seen. What is clear is that a full-blown trade war between the E.U. and the U.S. would leave only losers.”

At UBS, Paul Donovan’s morning note warned that new tariffs could rebound against American consumers. “Threatened U.S. tariffs appear more serious than those relating to Iran … they imply U.S. consumer prices of goods from the E.U. and UK will increase 4% to 10% (within about six months). This may reinforce the narrative of the U.S. affordability crisis.”

“Policy uncertainty is resurrected for U.S. businesses. This has constrained investment and hiring, but might have faded as firms adapt. Uncertainty on this scale may again put U.S. corporate activity on pause.”

There is also the question of whether Trump has enough domestic political capital to sustain his desire to conquer Greenland. 

“A Reuters/Ipsos poll last week suggested that only 17% of US citizens supported efforts to acquire Greenland, with 47% against. Only 4% approved of using military force with only 8% of Republican voters agreeing,” Jim Reid and his team at Deutsche Bank told clients this morning.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

• S&P 500 futures were down 1.12% this morning. The last session closed flat. Markets in the U.S. are closed for MLK Day.
• STOXX Europe 600 was down 1.25% in early trading.
• The U.K.’s FTSE 100 was down 0.49% in early trading. 
• Japan’s Nikkei 225 was down 0.65%.
• China’s CSI 300 was flat. 
• The South Korea KOSPI was up 1.32%. 
• India’s NIFTY 50 was down 0.42%. 
• Bitcoin was down to $93K.

President Trump may be overplaying his hand in negotiations for Greenland, economists are warning, after the Oval Office threatened new tariffs on E.U. countries if they did not support America’s demand to purchase the territory.

Over the weekend, President Trump posted on Truth Social (a site he owns) that “starting on February 1st, 2026, … Denmark, Norway, Sweden, France, Germany, The United Kingdom, The Netherlands, and Finland, will be charged a 10% tariff on any and all goods sent to the United States of America.

“On June 1st, 2026, the tariff will be increased to 25%. This tariff will be due and payable until such time as a deal is reached for the complete and total purchase of Greenland.”