Trump’s chase for Greenland – an investor explainer & playbook

​​​What is going on?

​Investors and indeed everyone else have had to get used to the sight of a United States (US) president openly threatening to acquire the territory of a long-standing ally. This is where we are, barely one year into Trump’s second term.

​Trump’s obsession with Greenland goes back to his first term, but has really gained traction now that he has surrounded himself with more pliable advisors. He thinks that Russia and China have designs on the Arctic, and that acquiring Greenland for the US is the way to prevent this. The fact that few Russian ships, and no Chinese ones, have been spotted near Greenland is merely superfluous detail.

​Can he do this?

​Given the US’ material preponderance over European North Atlantic Treaty Organisation (NATO), the answer is ‘yes’. Seizing the island could be done relatively quickly, though whether US commanders would follow those orders is debateable.

​He has however proposed that the US buy Greenland, with $700 billion being suggested as a price tag. Tariff revenue has been suggested as a way of meeting the bill, though this has been repeatedly ‘allocated’ to other purposes (e.g. a $2000 tariff rebate for consumers, increasing the defence budget by 50% and abolishing income tax). Trump argues (perhaps correctly) that Denmark is incapable of defending Greenland and that it should come under US sovereignty. 

​Other NATO members have opposed the plan, despatching small numbers of troops to show willingness and also to plan for a possible larger deployment. This is what has brought the wrath of the president down upon them, as 10% tariffs from 1 February are threatened, and 25% from 1 June.

​Why do markets care?

​We are very much in the realm of the ‘unknown unknown’. If the European Union (EU) were to escalate the crisis with a big tariff response, and the US were to respond in kind, we could find ourselves in a cycle that could end in a US withdrawal from NATO.

​But that is a worse case scenario. An EU response is likely to annoy Trump further, but if we look back to 2025’s repeated tariff drama then the more likely result is a negotiation that sees some kind of US-Denmark deal. At present, this doesn’t look like a rerun of the Liberation Day tariffs.

​Certainly, I don’t think anyone had ‘Trump threatens to acquire an ally’s territory’ on their bingo card for 2026, but the tariff is only 10%, and is not yet being implemented. As such, the response has been muted so far – the Dow Jones is about 700 points off its all-time high. While gold is at a record high, this is capitalising on an existing trend, not some kind of major reversal.

​Potential trades 

​Currency trades: betting against the dollar

​The US dollar is under pressure as political risks around US assets increase. Traders could look at shorting the dollar against the euro, while the Swiss franc and Japanese yen offer safer alternatives when tensions rise. If the EU announces new financial market support measures, these currency moves could accelerate.

​Equity longs: defence and security stocks

​European defence companies are benefiting from increased military spending across the continent. They could outperform their American counterparts if trust in US alliance commitments weakens. Focus on major defence contractors and their suppliers, along with cybersecurity firms and companies involved in critical infrastructure.

​Equity shorts: exporters at risk

​Car makers, luxury goods producers and industrial companies face potential tariff threats. These sectors are vulnerable to retaliation and slowing international trade. European companies that generate significant revenue from the US look particularly exposed if trade tensions worsen.

​Precious metals: safety buying continues

​Gold and silver have hit record highs on geopolitical stress and dollar weakness. Holding long positions captures both safe haven demand and protection against inflation. The charts support further gains while political uncertainty remains elevated.

​Commodities: resources in focus

​Access to the Arctic raises the value of energy resources, rare earth minerals and other critical materials. Shipping companies equipped for ice navigation could benefit if Arctic routes gain strategic importance. These trades work both as geopolitical plays and longer-term structural opportunities.