Stocks fell in afternoon trading on Wall Street on Tuesday after US President Donald Trump threatened to hit eight NATO members with new tariffs amid tensions over his efforts to control Greenland.
The S&P 500 fell 1.2 percent, reversing the record it set earlier last week. It was the first time that US markets reacted to Trump’s rise, as they were closed on Monday after Martin Luther King Jr. Day.
The Dow Jones Industrial Average was down 526 points, or 1.1 percent, as of 12:15 pm Eastern. The Nasdaq composite fell 1.5 percent.
During that time, the Toronto Stock Exchange fell nearly 5 percent.
Losses were widespread and led by technology stocks, many of which already have more influence on market sentiment due to large valuations. Retail, banking and industrial companies also fell sharply.
Nvidia, one of the world’s most valuable companies, fell 3.6 percent. Amazon fell 2.2 percent, JPMorgan Chase fell 1.2 percent, and Caterpillar lost 2 percent.
The energy sector gained as US crude oil prices rose 1.9 percent to USD$60.55 per barrel. The price of Brent crude, the international standard, rose 1.6 percent to $64.95. Exxon Mobil rose 1 percent.
Markets in Europe and markets in Asia fell.
Trump said on Saturday that he would impose a 10 percent import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.
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The combined annual output from the countries of the European Union is greater than that from the two largest importers of the US, Mexico and China.
Gold prices rose 3.4 percent and silver prices rose 5.7 percent. Both reached records. Such assets are often seen as safe havens in times of national turmoil.
Trade tensions apparently fueled bitcoin’s recent rally. The cryptocurrency rose above $96,000 late last week but has fallen back to around $90,300.
Treasury products were mixed in the bond market. The yield on the 10-year Treasury rose to 4.27 percent from 4.23 percent late Friday. The yield on the two-year Treasury held steady at 3.60 percent as of late Friday.
Trump linked his aggressive stance on Greenland to last year’s decision not to honor him with the Nobel Peace Prize, telling the Norwegian prime minister that he no longer felt “an obligation to think only about peace,” in a message released Monday.
Trump’s message to Jonas Gahr Støre appeared to ease tensions between Washington and its closest allies over his threats to seize Greenland, a sovereign territory of NATO member Denmark.
Trump’s threats have sparked anger and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first use of the European Union’s anti-enforcement tool.
The trade and political conflict with Europe is intensifying as world leaders gather at the annual meeting of the World Economic Forum in Davos, Switzerland this week. Wedbush Securities analyst Dan Ives said the new tariff threat is “obviously a thorn in the side of the conference,” but is likely to intensify over time.
“Our view is that last year the barking will be even worse than this issue and the threat of tariffs as negotiations and eventual disagreements between Trump and EU leaders continue,” Ives wrote in a note to clients.
Taxes have been looming on the US and global economy since 2024. Trump’s tax policy has been confusing and uncertain, consisting of threats or implementation of tariffs and often followed by delays or cancellations. Current taxes have added further pressure to already high prices on goods and the threat of more to come makes it difficult for businesses to plan ahead.
The threat of a tax hike already due to high inflation may further drive the Federal Reserve’s activity. The central bank cut its interest rate three times by the end of 2025 to help strengthen the economy as the job market weakens. But, it took a cautious view due to the risk of inflation, which remains above the Fed’s 2 percent target.
Low interest rates on mortgages may help boost economic activity, but they may also drive inflation, which would offset any gains from low interest rates.
The Fed, and Wall Street, will get another update on inflation on Thursday, when the government releases its personal consumption expenditures price index, or PCE. It is the Fed’s preferred measure of inflation.
The Fed meets next week for its policy meeting on interest rates and Wall Street is betting that the central bank will keep its benchmark interest rate unchanged.
Wall Street is also in the midst of the latest round of corporate earnings, which could help provide more insight into how companies are handling uncertainty from costs, national politics and wary consumers.
Industrial and conglomerate conglomerate 3M fell seven percent after reporting mixed results for its latest quarter. United Airlines and Netflix will report their results after the market closes on Tuesday. Companies from a variety of industries will report their results this week, including Johnson & Johnson, Halliburton and Intel.
© 2026 The Canadian Press
