Stock markets are expected to face losses, while prices of precious metals are predicted to surge following the decision to impose 25% tariffs on European allies.
Global stock markets are set for declines when trading resumes on Monday, after US President Donald Trump threatened eight European countries with fresh tariffs unless they support his Greenland acquisition plan.
Trump’s proposal would impose new duties of 10% on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland from 1 February, rising to 25% from 1 June. The announcement has sparked market fears and concerns among European businesses.
IG’s weekend trading suggests losses on the London Stock Exchange on Monday, while geopolitical tensions could push precious metal prices to new highs. Wall Street, reopening on Tuesday, is also expected to fall.
“This latest escalation raises worries about the potential weakening of NATO alliances and disruption of last year’s trade agreements with Europe, prompting investors to avoid riskier assets and boosting demand for gold and silver,” said Tony Sycamore, IG market analyst.
IG data indicated the FTSE 100 could drop 0.9%, while the Dow Jones may fall 0.5%. Gold rose 0.6% to $4,625 per ounce, nearing last week’s record of $4,642, and silver increased 0.5% to $90.41 per ounce.
European leaders, including UK Prime Minister Keir Starmer and European Commission President Ursula von der Leyen, condemned Trump’s move, which threatens NATO unity.
“This policy has stirred fresh economic turmoil and setbacks for the UK economy,” said Susannah Streeter, chief investment strategist at Wealth Club. “For companies trading with the US, the new tariffs add another layer of costs likely to be passed to American customers.”
European business groups are urging a strong EU response. Germany’s VDMA engineering association called for the use of the EU’s “anti-coercion instrument” to counter the US. “If the EU yields, it will only encourage more unreasonable demands and threats,” said VDMA president Bertram Kawlath. Hildegard Müller of the German auto industry warned the tariffs would impose “enormous” costs on European manufacturers.
William Bain of the British Chambers of Commerce said new US tariffs would hurt UK exporters and urged the UK government to implement last year’s trade deal with the US, stressing that lowering, not raising, tariffs is key to boosting transatlantic trade.
