The Greenland controversy took a dramatic and unexpected turn during the World Economic Forum's annual meeting in Davos, Switzerland. President Trump first issued an ultimatum of "either sell the island or face tariffs," triggering significant turmoil in financial markets. However, just days later, he abruptly reversed course, announcing a "framework agreement" with NATO and canceling the threatened tariffs and military action.
Confronted with the volatility and unpredictability of US policy, a group of European institutional investors, spearheaded by the Danish pension fund AkademikerPension, sent a clear signal: they are "selling America." The critical question remains: can Europe, which holds over $3.6 trillion in US Treasury debt, effectively extinguish America's ambitions for Greenland?
On January 21, local time, US President Trump, attending the World Economic Forum in Davos, announced that following a "productive" meeting with NATO Secretary General Mark Rutte, the two sides had established a "framework for an agreement concerning the future of Greenland and the entire Arctic region." Consequently, he decided to cancel the tariff increases on eight European nations—Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland—that were scheduled to take effect on February 1. The specific details of this "framework agreement" were not fully disclosed by either the US or NATO. Trump stated that the plan involved defense and mineral extraction arrangements, was "beneficial for everyone," and that the US "got everything it wanted." According to reports, the agreement will not involve a transfer of Greenland's sovereignty but may include the deployment of the US "Gold Dome" missile defense system on Greenland, an "update" to the 1951 US-Denmark defense agreement concerning Greenland, and increased NATO activity in the Arctic region. A NATO official mentioned that a proposal was discussed during a meeting on the 21st, involving the possibility of Denmark allowing the US to build additional military bases in Greenland. Furthermore, sources revealed that the "framework agreement" is also expected to grant the US priority purchasing rights for the island's mineral resources. Moreover, Trump completely shifted his previous rhetoric about "buying" the island. In an interview on January 22, he stated he would not "pay any price" to acquire Greenland. He claimed that deploying the "Gold Dome" system was the US's sole contribution. Citing security considerations, he asserted that the US would gain "full access permissions" to the region, which would be "permanent, with no time limit."
Denmark and Greenland swiftly expressed strong dissatisfaction with Trump's unilaterally announced "framework agreement." On January 22, Greenland's Premier, Jens-Frederik Nielsen, stated bluntly that the autonomous government was unaware of the specifics of Trump's so-called "framework" and emphasized that NATO Secretary General Rutte had no authority to negotiate on behalf of Denmark and Greenland. He declared, "We are willing to discuss many things, but sovereignty is a red line." Danish Prime Minister Mette Frederiksen also responded firmly, stating Denmark's red line remains consistent: "We will not give up sovereignty; Greenland is part of the Kingdom of Denmark." European Commission President Ursula von der Leyen announced on January 23 that the EU would soon propose a "substantial investment package" for Greenland and increase defense equipment investments in the Arctic region. Tensions escalated on the military front as well. Reports on January 23 indicated that Danish soldiers recently deployed to Greenland were carrying substantial live ammunition and had received clear instructions to prepare for the "worst-case scenario"—an unexpected US attack on Greenland, in which case Denmark would immediately engage in combat. The report noted that soldiers also carried KUP ammunition, typically used in response to "coups or hostile invasions."
Following Trump's 180-degree policy shift, US stock market trends immediately reversed. On January 20, the Dow Jones plummeted by 870.74 points, a drop of 1.76%, while the S&P 500 and Nasdaq also fell over 2%, marking the worst single-day performance for all three major indices since October 10 of the previous year. Safe-haven sentiment surged dramatically, driving both COMEX gold and spot gold to new highs. But the very next day, January 21, the Dow surged by 589 points, and the S&P 500 and Nasdaq also rose by over 1.1%. Market traders described this as another classic "TACO trade" (Trump Always Chickens Out), where extreme threats create market panic, only for the threats to be withdrawn later, calming the storm. An analyst pointed out that while Trump's repeated threats and subsequent retreats teach markets to quickly digest panic and rebound in short order, the volatility trading itself has now become a significant risk.
Although the short-term arbitrage opportunities of "TACO trades" have repeatedly proven effective, the Trump administration's erratic threats and policy uncertainty are eroding the credibility of dollar-denominated assets, strengthening the sentiment to "sell US assets" and prompting European, particularly Nordic, countries to begin offloading US Treasuries. On January 20, the Danish pension fund AkademikerPension, which manages approximately $25 billion in assets, announced it would completely liquidate its roughly $100 million holdings of US Treasury bonds by the end of the month. This move was seen as firing the first shot in the "Sell America" campaign. That same day, the yield on the 30-year US Treasury bond rose above 4.9%, while the 10-year yield climbed to around 4.30%. Explaining the decision, AkademikerPension's Chief Investment Officer, Anders Schelde, first pointed to the US's poor fiscal health. He stated bluntly, "The United States is basically not a good credit. In the long term, US government finances are not sustainable." He also admitted that the Greenland controversy made the decision "easier" and warned that if geopolitical conflicts escalate, the fund would reassess all its US-related risk exposures. Requests for further comment sent to AkademikerPension were declined. On January 21, Sweden's largest private pension fund, Alecta, announced it had sold the majority of its US Treasury holdings, amounting to approximately $7.7 to $8.8 billion, citing increased US policy risk and heightened unpredictability. On the same day, another Danish pension fund, PBU, confirmed it was advancing plans to sell US bonds. Its head坦言 admitted the move was to "rid itself of financial dependence on the US, in case Trump decides to directly sanction the Danish financial industry." Subsequently, other institutions, including one of Denmark's largest pension and insurance providers, PFA, Greenland's local pension fund SISA Pension, and the Danish teachers' pension fund Laerernes Pension, also reportedly began cutting or considering a full exit from US assets.
Beyond Europe, the Ontario Teachers' Pension Plan (OTPP) in Canada also stated it had reduced its exposure to the US dollar and US Treasuries. These institutions widely believe that the Trump administration's capricious policies are severely undermining confidence in US assets. Europe is America's largest "creditor." According to US Treasury data from November 2025, European nations (including non-EU members like the UK) hold approximately 40% of all foreign-held US Treasury debt, amounting to $3.6 trillion—1.8 times the combined holdings of China and Japan.
When considering all financial assets, including US stocks and corporate bonds, EU member states hold over $10 trillion in US dollar-denominated assets. If funds managed by European financial institutions are included, this figure rises to approximately $12.6 trillion. George Saravelos, Global Head of FX Research at Deutsche Bank, warned, "Despite its formidable military and economic power, the US has a critical vulnerability: it relies on other countries to repay its debts." Models from J.P. Morgan indicate that for every 1 percentage point decline (approximately $300 billion) in foreign-held US debt as a percentage of US GDP, the yield on 5-year US Treasury notes would rise by over 33 basis points.
Faced with potential debt sales by multiple nations, Trump warned on January 22 that if European countries sell their US Treasury holdings to pressure Washington, "we will take major retaliatory measures; we hold the chips." Trump's concern extends beyond a short-term crisis in US asset prices; it is fundamentally rooted in the constraints of US fiscal policy and debt. Analysts from a securities firm noted in a report that by the end of 2025, total US debt had ballooned to $38 trillion, with approximately $10 trillion in maturing debt needing refinancing in 2026. Against a narrative of deteriorating fiscal health, all three major rating agencies downgraded the US sovereign credit rating in 2025, making markets more susceptible to a vicious cycle: credit discount → demand for higher yields → increased interest expenses → higher financing costs → worsening fiscal pressure. A European studies expert pointed out that when facing a博弈对手 that recognizes no bottom line and excels at maximum pressure, it is a rational capital decision for Europe to preemptively adjust asset allocation to avoid potential shocks. Once the "final底线" of rules is broken, rebuilding trust becomes exceedingly difficult. The impact is profound: European capital will factor "US-Europe relationship risk" into investment costs, leading to higher risk premiums for future transatlantic investments and greater caution in capital flows.
However, British media analysis suggests that Europe's attempt to "weaponize capital" faces practical obstacles: most US dollar assets are held by private institutions and individuals, limiting governments' ability to force coordinated sales; furthermore, large-scale sell-offs could cause the euro to surge, damaging European export competitiveness. Another analyst suggested that global long-term reliance on the US dollar—as no other sovereign currency can truly replace it yet—means Europe's countermeasures are more symbolic, essentially serving as bargaining chips in a broader博弈.
As early as his first term, Trump viewed the Arctic as a frontier in great power competition. In his second-term inauguration speech, he explicitly stated, "The Arctic is America's strategic treasure trove for the future." US media has highlighted Greenland's importance using three key aspects of its "position." As the world's largest island, Greenland lies on the shortest sea and air routes between North America and Europe, commanding key waterways connecting the North Atlantic and Arctic Oceans, effectively serving as a "highway" linking the Arctic and North America.
This route shortens the journey by thousands of kilometers compared to traditional lanes and could become a new global trade artery in the future. According to Arctic Council statistics, the number of vessels in navigable Arctic waters grew by 37% between 2013 and 2023. Data from 2024 showed Arctic route freight volume reached a record 37.9 million tons, a tenfold increase from 3.7 million tons a decade earlier.
In terms of economic value, research indicates that 31 of the 34 critical minerals identified by the EU can be found in Greenland. US Vice President Vance has described Greenland as possessing "incredible natural resources." According to US Geological Survey (USGS) data from January 2025, Greenland holds substantial rare earth deposits of 1.5 million tons, ranking 8th globally. Additionally, the waters around Greenland are estimated to hold over 17.5 billion barrels of undiscovered oil and significant natural gas reserves.
As ice cover diminishes, the difficulty of extracting these resources decreases, making their commercial potential highly attractive to a US intent on revitalizing its manufacturing sector.
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