US stocks dropped sharply in morning trading on Tuesday after President Donald Trump threatened to impose new tariffs on eight NATO members. The move has escalated geopolitical tensions over his push to assert American control over Greenland.
The sell-off marked the first opportunity for markets to react to the latest escalation, after U.S. exchanges were closed on Monday for the Martin Luther King Jr. Day holiday.
At around 10.04 am ET, the Dow Jones Industrial Average was down 682 points, or 1.5%. The S&P 500 fell 1.5%, retreating further from the record high it had touched early last week, while the Nasdaq Composite slid 1.7%, weighed down by losses in heavyweight technology stocks, news agency AP reported.
Losses were broad-based across sectors. Technology stocks led the decline, reflecting their outsized influence on market movements. Nvidia dropped 3.2%, Amazon fell 2.7%, JPMorgan Chase declined 1.9%, and Caterpillar lost 1.3%.
Retailers, banks and industrial companies also traded sharply lower. The energy sector was a rare gainer, supported by higher crude prices, with Exxon Mobil rising 1.5%.
The market downturn followed Trump’s announcement over the weekend that the United States would impose a 10% import tax from February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.
The annual combined imports from European Union nations exceed those from the US’s two largest individual import sources, Mexico and China, underscoring the potential economic impact of a prolonged trade standoff.
Trump linked the tariff threat to opposition from European countries to his desire to bring Greenland, a self-governing territory of NATO member Denmark under US control.
He also tied his aggressive stance to Norway’s decision last year not to award him the Nobel Peace Prize, saying in a text message to Norwegian Prime Minister Jonas Gahr Støre that he no longer felt “an obligation to think purely of Peace.”
His remarks appeared to intensify a standoff between Washington and its closest allies, triggering outrage and a flurry of diplomatic activity across Europe. European leaders are weighing possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.
European markets fell sharply for a second straight session, while Asian markets also ended lower. In Asia, Japan’s Nikkei 225 dropped 1.1%, Hong Kong’s Hang Seng slipped 0.3%, South Korea’s Kospi fell 0.4%, Australia’s S&P/ASX 200 lost 0.7%, Taiwan’s Taiex gained 0.4%, and India’s Sensex declined 0.8%.
Investors sought safety amid rising uncertainty, pushing precious metals to fresh highs. Gold surged 3.2% to a record level, while silver soared 7%, with both assets benefiting from heightened demand for safe havens during geopolitical turmoil.
In the bond market, Treasury yields were mixed. The yield on the benchmark 10-year Treasury rose to 4.28% from 4.23% late Friday, while the two-year yield edged down to 3.59% from 3.60%. Oil prices also moved higher, with U.S. benchmark crude rising 1.5%.
Market participants said geopolitical risks would remain a dominant theme in the near term, with investors closely watching developments around trade, diplomacy and policy signals as the standoff between the US and Europe unfolds.
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