Investors Flee to Gold and Silver as US Plan for 25% Tariffs on European Allies Sparks Fears of Trade War and NATO Tensions
Global financial markets are preparing for sharp losses after US President Donald Trump threatened to impose sweeping new tariffs on eight European countries. The move is intended to pressure them to support his controversial bid to acquire Greenland.
The proposed levies start at 10% on 1 February and rise to 25% by 1 June. They target imports from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland. The announcement has rattled investors. It has also triggered geopolitical alarm and revived fears of a transatlantic trade war.
Stock Markets Point to Losses
Weekend trading indicators suggest a difficult start to the week. The FTSE 100 is expected to fall 0.9 percent. Meanwhile, Dow Jones futures are down 0.5 percent. European indices are likely to follow similar declines.
“This latest flashpoint has heightened concerns over a potential unravelling of Nato alliances and disruption to last year’s trade agreements,” said Tony Sycamore, analyst at IG. “As a result, investors are moving into gold and silver as protection against uncertainty.”
Gold and Silver Near Record Highs
Precious metals surged following the announcement. Gold rose to $4,625 per ounce, close to last week’s record of $4,642. Silver climbed to $90.41 per ounce. Analysts say that further escalation could push both metals to new historic peaks. This is due to growing geopolitical risk.
European Leaders Condemn Tariff Plan
European governments reacted with alarm. UK Prime Minister Keir Starmer and European Commission President Ursula von der Leyen criticised the move. They warned it could undermine Nato unity and damage economic recovery.
“This policy has whipped up fresh economic chaos and is a setback for the UK economy,” said Susannah Streeter, chief investment strategist at Wealth Club. “Moreover, companies have little room left to absorb extra costs. These tariffs will almost certainly be passed on to American consumers. This will fuel inflation and hurt trade on both sides of the Atlantic.”
Business Groups Urge EU Response
Pressure is mounting for Brussels to retaliate. Germany’s engineering association VDMA called on the European Commission to deploy its anti-coercion instrument against Washington.
“If the EU gives in, it will only encourage the US president to make the next ludicrous demand,” warned Bertram Kawlath, VDMA president.
The German auto industry echoed those concerns. Association head Hildegard Müller said the financial impact on European manufacturers would be enormous.
UK Exporters Fear Economic Setback
British trade bodies warned that the tariffs could derail fragile growth. William Bain, head of trade policy at the British Chambers of Commerce, said:
“New US duties are more bad news for UK exporters. Therefore, the government must prioritise implementing the UK-US economic prosperity deal. It should also negotiate calmly to remove this threat.”
What Happens Next
Markets will be closely watching EU emergency talks on potential counter-measures. They will also monitor any clarification from the White House on exemptions. In addition, central banks’ responses to renewed inflation risks will be critical.
With the 1 February deadline approaching, analysts fear prolonged uncertainty could prove more damaging than the tariffs themselves.