S&P futures indicated a pessimistic outlook for Tuesday morning as President Donald Trump escalated his rhetoric regarding Greenland, suggesting the imposition of new tariffs on nations opposing the acquisition of the Danish territory by the United States. Futures data last indicated an implied opening decline of 630 points for the Dow Jones Industrial Average. The S&P 500 is set to decline by 93 points, approximately 1.3%, while the implied opening for the Nasdaq indicates a decrease of 405 points, or 1.6%. Trump declared in a Truth Social post on Saturday that U.S. imports from eight NATO members will encounter increasing tariffs “until such time as a Deal is reached for the Complete and Total purchase of Greenland.” According to Trump, the tariffs will initiate at 10% on February 1 and escalate to 25% by June 1.

On Tuesday, Trump issued a warning regarding the imposition of 200% tariffs on French wines and champagne, in light of reports indicating that President Emmanuel Macron is resistant to participating in his proposed Board of Peace for Gaza. Trump criticized the U.K., describing the British government’s decision to transfer sovereignty of the Chagos Islands — home to a U.K.-U.S. military base — to Mauritius as a “act of great stupidity.” The statement articulated that the action represents “another in a very long line of National Security reasons why Greenland has to be acquired.” The administration under Trump had previously expressed support for the agreement between the U.K. and Mauritius. European leaders have characterized Trump’s recent tariff threats as “unacceptable,” and are allegedly contemplating countermeasures — with France reportedly advocating for the European Union to deploy its most potent economic counter-threat, referred to as the “Anti-Coercion Instrument.”

On Monday, shares of European car manufacturers and luxury goods firms experienced a decline, whereas certain defense stocks on the continent saw an uptick. Trump, scheduled to address the World Economic Forum in Davos, Switzerland, on Wednesday, indicated that he had consented to engage with European leaders at the conference to deliberate on his aspirations regarding Greenland. In the United States, Monday evening represented the initial opportunity for investors to comprehensively respond to the escalation in trade tensions, given that markets were closed in observance of the Martin Luther King holiday. “With the US off yesterday, the implications of the tariff threats over Greenland had yet to fully percolate through financial markets,” stated Jim Reid in a Tuesday morning note. This has fueled escalating concerns regarding potential retaliatory trade actions from Europe, accompanied by increasingly robust statements from various officials.

Jeff Kilburg posits that investors ought to consider purchasing the dip should equities decline as a result of tariff apprehensions, as attention will transition from Davos to the upcoming Q4 earnings season in the middle of the week. The administration’s levies are currently facing scrutiny as the financial markets anticipate a significant court ruling. The Supreme Court may deliver a ruling as early as next week regarding the potential invalidation of the Trump tariffs, imposed by the president under the International Emergency Economic Powers Act. Major U.S. averages are emerging from a week characterized by losses, while quarterly financial results are anticipated from a variety of companies, including Netflix, Charles Schwab, Johnson & Johnson, and Intel, with guidance from these firms considered essential to maintain bullish sentiment for U.S. equities.