By George Glover and Al Root
President Donald Trump's latest tariff threats, connected to acquiring the Danish territory of Greenland, were clearly spooking investors on Tuesday with auto makers among the stocks falling ahead of the opening bell.
Defense stocks are catching a bid. That feels odd. Greenland drama isn't good for American weapons makers.
Shares in Ford and General Motors were down 1% and 1.1%, respectively, in premarket trading. U.S. shares in Jeep owner Stellantis slipped 1.2%. Futures tracking the S&P 500 were 1.7% lower.
The move lower came after Trump said in a Truth Social post Saturday that he would impose a 10% tariff on eight European countries from Feb. 1 if they don't allow his administration to acquire Greenland. The tariff will rise to 25% on June 25, he added.
U.S. auto makers aren't particularly reliant on imports from Europe, but Trump's posturing could still end up being bad news for them if the European Union hits back with levies of its own.
Treasury Secretary Scott Bessent played down the risk of that at the World Economic Forum in Davos on Tuesday. "I am confident that the leaders will not escalate and that this will work out in a manner that ends up in a very good place for all for national security, for the U.S. and for Europe," Bessent said.
Still, European stocks were extending their recent selloff on Tuesday, with the continent's flagship Stoxx 600 index 0.8% lower. Citi strategist Beatha Manthey cut her rating on Europe to neutral on Monday, citing broadening earnings-per-share risk for companies there.
But pockets of the U.S. market appeared to be benefiting from the concerns about Greenland, despite the broader slump.
Defense stocks were rallying on Tuesday. RTX climbed 1.1%, Honeywell International added 2.2%, and Northrop Grumman gained 1.9%. Lockheed Martin was the outlier, down 0.4%.
The move higher came despite Greenland worries, which Capital Alpha Partners analyst Byron Callan calls "negative for U.S. defense, positive for European defense."
U.S. defense exports would be at risk if Trump continues to escalate tensions with Europe, leaving those countries to rely more on their own contractors for protection. Denmark, Germany, Finland, and other countries are major customers of U.S. defense contractors.
To be sure, rising defense spending in the U.S. and Europe has buoyed American defense stocks. And European shares have already had an incredible run.
Coming into Tuesday trading, shares of Germany's Rheinmetall, France's Thales, Italy's Leonardo, and Britain's BAE Systems were up an average of 109% over the past 12 months. Shares of Lockheed Martin, Northrop Grumman, General Dynamics, and L3Harris Technologies were up a still respectable 38%.
Shares of the European defense contractors were down a little in Tuesday trading, perhaps a sign that Europeans believe a more sustainable solution to their Greenland problem can be achieved without pressuring traditional U.S. Allies and NATO members.
For now uncertainty reigns. Gold prices surged as investors to piled into havens. Newmont shares rose 3.3%, making the gold miner the S&P 500's best performer ahead of the opening bell.
Write to George Glover at george.glover@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 20, 2026 08:35 ET (13:35 GMT)
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