Tariff shocks keep opening buy-the-dip windows, but policy risk is creeping higher again
US President Donald Trump turned a Greenland tariff scare into a one‑day buying window, sending US markets from their worst drop since October to their biggest gain in weeks.
Earlier in the week, Trump threatened new tariffs on eight European allies unless they helped facilitate a US takeover of Greenland, which triggered a sharp “sell America” move across US equities, the dollar and Treasuries, according to The New York Times.
The S&P 500 and Nasdaq fell to their lowest levels in months and slipped into negative territory for 2026 after that warning.
European lawmakers quickly pushed back.
The European Parliament suspended work on a trade deal with the US, and the European Union called an emergency summit in Brussels after the Greenland demands and tariff threats, according to CNBC.
Then Trump flipped the script in Davos.
He told business and political leaders he would not use force to seize Greenland and later said on CNBC that “we have a concept of a deal” with Greenland.
On Truth Social, he added that after “a very productive meeting” with NATO Secretary General Mark Rutte, “we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region,” and that he would not impose the tariffs scheduled for February 1.
He also said the deal, “if consummated, will be a great one for the United States of America” and its North Atlantic allies, BNN Bloomberg noted.
The change in tone sparked a broad rebound.
The Dow, S&P 500, and Nasdaq each gained more than 1 percent on Wednesday, with the S&P 500 posting its biggest daily percentage rise in about two months and recovering just over half of the previous day’s 2.1 percent drop.
Even so, all three indexes remained down for the week, CNBC reported.
Volatility eased alongside the rally.
VIX fell more than 15 percent to around 17 after hitting its highest level since November the day before, as per Reuters.
In fixed income, US Treasury yields reversed part of their jump.
Reuters said the 10‑year yield slipped back towards 4.25 percent after spiking on the earlier selloff, while the 30‑year moved down from near 5 percent.
Spot gold, which had already been rallying as a haven, set a fresh record above US$4,800 an ounce and rose about 1.1 percent on the day.
Commentators framed the episode as another example of Trump using tariff threats as a negotiating tool and market lever.
Jim Cramer said on CNBC’s “Mad Money” that there are “huge stock market ramifications to almost everything” Trump does and argued that in his second term Trump is “far more comfortable taking the market down, not up.”
He told viewers to expect “plenty of good buying opportunities over the next three years” as these episodes play out.
Cramer linked this to last April’s “Liberation Day” tariffs, when Trump announced steep new duties that triggered a sharp selloff and retaliatory moves from countries such as China before later softening the measures.
Markets then fully recouped their losses by mid‑May as deals and carve‑outs emerged.
Others highlighted growing scepticism.
Jed Ellerbroek at Argent Capital Management told CNBC that “Trump is so unpredictable and he changes direction so quickly.
The stock market no longer assumes that his pronouncements are going to be enforced,” and argued that the Greenland conflict would have done more damage if investors had believed it marked a true geopolitical break.
Takahide Kiuchi at Nomura Research Institute said “markets recently have seen a clear trend of capital flight from the US market” and warned that the administration “may be forced to reassess its tariff policies toward Europe” to restore stability, as per The New York Times.
