<\/p>\n
The US treasury secretary, Scott Bessent, has urged European countries not to retaliate against the US\u2019s trade tariffs announced over the Greenland<\/a> crisis.<\/p>\n Speaking in Davos during the World Economic Forum, Bessent said countries and companies should pause and \u201clet things play out\u201d after Donald Trump<\/a> threatened a 25% tariff on a slew of European countries in his pursuit of the autonomous Danish territory.<\/p>\n As global stock markets fell<\/a> amid political uncertainty, Bessent indicated that retaliatory tariffs would be unwise, citing last year\u2019s tit-for-tat tariff war that broke out between the US and China.<\/p>\n Last April, Trump\u2019s \u201cliberation day\u201d tariff announcement<\/a> caused turmoil in global stock markets before some countries agreed trade deals and markets recovered to reach record highs<\/a> later in the year, fuelled in part by the AI boom.<\/p>\n Bessent told a press conference at the annual meeting of global leaders: \u201cI would say this is the same kind of hysteria that we heard on 2 April. There was a panic.\u201d<\/p>\n Bessent said: \u201cWhat I am urging everyone here to do is sit back, take a deep breath, and let things play out. The worst thing countries can do is escalate against the United States.<\/p>\n \u201cWhat President Trump is threatening on Greenland is very different than the other trade deals. So I would urge all countries to stick with their trade deals. We have agreed on them, and it does provide great certainty.\u201d<\/p>\n Bessent said he did not believe that European countries will retaliate against the US over the Greenland crisis by selling their holdings of America\u2019s debt.<\/p>\n Bessent claimed that predictions that Europe could stop lending to the US, and dump its holdings of US treasuries, was a \u201cfalse narrative\u201d that defied logic.<\/p>\n Bessent accused the media of having \u201clatched on\u201d to a report from Deutsche Bank on the issue, and of being \u201chysterical\u201d.<\/p>\n \u201cI think it is a completely false narrative. It defies any logic, and I could not disagree more strongly,\u201d he added.<\/p>\n Given the US national debt exceeds $38tn (\u00a328tn), and the country ran a deficit of $1.78tn in 2025, a buyers\u2019 strike would probably push up America\u2019s cost of borrowing, and lower the value of existing debt held by investors around the world.<\/p>\n Bessent appeared to be referring to a research note from the Deutsche Bank analyst George Saravelos, who said on Sunday that \u201cEurope owns Greenland, it also owns a lot of treasuries\u201d.<\/p>\n Saravelos wrote: \u201cFor all its military and economic strength, the US has one key weakness: it relies on others to pay its bills via large external deficits.<\/p>\n \u201cEurope, on the other hand, is America\u2019s largest lender: European countries own $8tn of US bonds and equities, almost twice as much as the rest of the world combined.<\/p>\n \u201cIn an environment where the geoeconomic stability of the western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part.\u201d<\/p>\n US government debt is regarded as a \u201crisk free\u201d holding in the markets, used to price other assets. Bessent predicted that European governments will continue to hold it.<\/p>\n Bessent is part of the largest ever US delegation to Davos; with Trump is due to address the meeting on Wednesday.<\/p>\n