Tuesday is the first trading day on U.S. stock markets since President Donald Trump escalated his threats over Greenland this weekend.
The president threatened additional tariffs on allied countries that objected to his desired takeover of the Danish territory. The geopolitical uncertainty that has emerged appears to be behind a decline in stock futures, particularly in Big Tech stocks.
And that fall has reignited concerns about a revived “Sell America” trade. Here’s what you need to know.
What’s happened?
As Fast Company previously reported, over the weekend, President Donald Trump issued economic threats against eight allied nations—and NATO members—who spoke out against the president’s desire to acquire Greenland, a territory of the Kingdom of Denmark.
Trump’s threats included additional tariffs he says will be levied against goods imported to America from eight countries: Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the United Kingdom.
The president said an additional 10% tariff will be levied on those countries’ goods from February 1, and that additional tariff rate will rise to 25% on June 1 and last “until such time as a Deal is reached for the Complete and Total purchase of Greenland,” (sic).
European leaders and the European Commission have reacted strongly to Trump’s threats, repeatedly stressing that Greenland is not for sale and that allies don’t threaten other allies with harsh economic consequences when one of them doesn’t get their way.
European governments are reportedly keen to resolve the situation diplomatically, but they are also considering a number of economic countermeasures should Trump go ahead with his plans to apply new tariffs on the stated nations.
Countermeasures under discussion include retaliatory tariffs on American products entering Europe, as well as a never-before-used Anti-Coercion Instrument (ACI).
The ACI is a tool at the EU’s disposal that could not only restrict trade with a target nation but also pause all investments in that nation and suspend intellectual property rights.
Stock markets and Big Tech fall
The geopolitical uncertainty Trump has raised with his Greenland escalation is keeping governments on both sides of the Atlantic on the edge of their seats.
But they aren’t the only ones.
Currently, investors appear to be in a state of major jitters due to the latest geopolitical hand grenade lobbed by Trump. As of the time of this writing, in premarket trading, America’s stock market futures are all down significantly across the board.
This includes S&P futures, currently down 1.58%, Dow futures, currently down 1.38%, and Nasdaq futures, currently down 1.95%.
And it’s not just the overall markets that are looking set to fall once the opening bell rings this morning.
As of the time of this writing, America’s Big Tech companies are seeing their stock prices down across the board, including:
- Apple (Nasdaq: AAPL): down 1.22%
- Amazon (Nasdaq: AMZN): down 2.93%
- Alphabet (Nasdaq: GOOG): down 2.84%
- Meta Platforms (Nasdaq: META): down 2.58%
- Microsoft (Nasdaq: MSFT): down 1.73%
- Nvidia (Nasdaq: NVDA): down 2.45%
- Tesla (Nasdaq: TSLA): down 2.65%
Uncertainty or a revived ‘Sell America’ trade?
While U.S. markets were closed yesterday in honor of Martin Luther King Jr. Day, other assets traded as usual, including cryptocurrencies and precious metals like gold.
Many major cryptocurrencies have fallen steadily since Trump’s Greenland escalation over the weekend, while gold has reached all-time highs.
But these moves aren’t surprising.
The threat of America imposing economic retaliation on its NATO allies for refusing to relinquish Greenland to its possession generates a level of geopolitical uncertainty the world has not seen since the invasion of Ukraine by Russia in 2022.
And such uncertainty almost always rattles investors, sending them fleeing from volatile assets like cryptocurrency to safe havens like gold.
Yet what investors will be waiting to see today is whether the selloff in America’s Big Tech stocks is simply an ordinary, expected reaction we tend to see when geopolitical uncertainty arises, or whether it’s the beginning of a new “Sell America” trade.
What is a ‘Sell America’ trade?
The Sell America trade describes when global investors decide to sell off American assets—like U.S. stocks and bonds—either to protect their profits from an economic downturn in the U.S. driven by geopolitical uncertainty, or as a punitive response to protest America’s actions they disagree with.
Right now, it’s probably too early to tell whether Tuesday’s premarket selloff in U.S. stocks is being driven by a renewed Sell America trade or whether it’s just a normal investor reaction to uncertain times.
But expect to see much more speculation about the issue in the days ahead.