Former US President Donald Trump has intensified his campaign to acquire Greenland, applying significant pressure on the United Kingdom and other European allies with threats of punitive tariffs and refusing to rule out military action. The escalating geopolitical tension triggered immediate market repercussions, with London's FTSE 100 falling sharply.
Market Turbulence and Diplomatic Firestorm
The FTSE 100 Index dropped more than 120 points soon after opening on Tuesday 20 January 2026, down 1.3% at 10,068.4. This followed a 0.4% decline on Monday, reflecting investor anxiety over the potential for a major trade and diplomatic rift. European indices mirrored the slump, with Germany's Dax down 1% and France's Cac 40 off 0.9% in early trading, after steep overnight falls across Asian markets.
The market turmoil was directly linked to a series of provocative posts by Mr. Trump on his Truth Social platform. He threatened to impose 10% tariffs on the UK and European allies from 1 February unless they acquiesce to his ambition to purchase Greenland, a vast, semi-autonomous territory of Denmark. Notably, he has not dismissed the possibility of using military force to seize the island.
Truth Social Onslaught: Maps, Messages, and Accusations
From the Oval Office to Davos, Mr. Trump launched a digital offensive. He shared a doctored image showing European leaders examining a map where Greenland, Canada, and Venezuela were draped in the US flag. Another post depicted him, Vice President JD Vance, and Secretary of State Marco Rubio raising a flag in Greenland beside a sign declaring it "US territory est. 2026".
In a revealing glimpse behind the scenes, he published private communications from world leaders attempting to manage the crisis. A text from France's Emmanuel Macron, offering to host an impromptu G7 summit in Paris, included the plea: "I do not understand what you are doing on Greenland." NATO chief Mark Rutte messaged, "I am committed to finding a way forward on Greenland," while promising to highlight Trump's work on other global issues.
UK in the Crosshairs Over Chagos Decision
Mr. Trump's most pointed criticism was reserved for the United Kingdom, despite Prime Minister Sir Keir Starmer's efforts to foster a close relationship. He lambasted the UK's decision to cede sovereignty of the Chagos Islands to Mauritius, branding it "an act of great stupidity." He argued that a NATO ally willingly giving away territory justified his own aggressive pursuit of Greenland, claiming, "There is no doubt that China and Russia have noticed this act of total weakness."
This stance marked a stark reversal from previous US support for the Chagos agreement, which Secretary Rubio had last year called a "monumental achievement." The UK government maintains the deal was necessary due to international court rulings that jeopardised the islands' status and the critical UK-US Diego Garcia military base.
As Mr. Trump travelled to the World Economic Forum in Davos, the episode underscored a profound shift in transatlantic diplomacy, with economic threats and territorial ambitions creating unprecedented strain with traditional European partners.
