US Treasury Secretary Scott Bessent urged calm amid a growing transatlantic rift over President Donald Trump\u2019s ambitions to take over Greenland, calling for allies to honour their trade agreements and dismissing suggestions that Europe would forcefully retaliate by dumping US treasuries.<\/p>\n
\u201cI am confident that the leaders will not escalate, and that this will work out in a manner that ends up in a very good place,\u201d Bessent said Tuesday during a press conference at Davos, where he is attending the World Economic Forum.<\/p>\n
Bessent likened the uproar over Greenland to what he called the \u201chysteria\u201d that followed Trump\u2019s announcement in April of last year of sweeping country-by-country tariffs which sparked a fierce market and political blowback.<\/p>\n
\u201cThis is the same kind of hysteria that we heard on April 2,\u201d he said. \u201cThere was a panic. And what I\u2019m urging everyone here to do is sit back, take a deep breath, and let things play out.\u201d<\/p>\n
Still, Bessent\u2019s defensive posture highlighted the firestorm awaiting Trump when he is expected to arrive in Davos on Wednesday following his threat of tariffs against allies who have opposed his bid to acquire the Danish territory of Greenland. Trump said earlier Tuesday that he would meet with various parties to discuss the matter.<\/p>\n
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The tariff threat sparked alarm from European allies and talk from French President Emmanuel Macron of unleashing the European Union\u2019s anti-coercion instruments to push back on the US, though German Chancellor Friedrich Merz tamped down on that idea.<\/p>\n
Asked about reports of Europe possibly selling US treasuries, a potential countermeasure that would have seismic impacts on markets, Bessent dismissed that speculation as a \u201cfalse narrative.\u201d<\/p>\n
\u201cIt defies any logic and I could not disagree more strongly on that,\u201d he told reporters.<\/p>\n
European countries also hold trillions of dollars of US bonds and stocks, some of which sit with public sector funds. That\u2019s spurring speculation they could sell such assets in response to Trump\u2019s renewed tariff threats, potentially driving borrowing costs up and equities down given US reliance on foreign capital.<\/p>\n
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But most market strategists believe there\u2019s a low chance policymakers would ultimately go so far, given their broad reluctance to stand up to Trump since his return to power a year ago. And any weaponization of European holdings of US assets would represent a severe escalation. In effect, it would expand a simmering trade war \u2014 which investors largely shrugged off last year \u2014 with a financial conflict that directly impacts capital markets.<\/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 Bessent said.<\/p>\n
Bessent also sought to reaffirm the US commitment to NATO, saying that US membership in the security bloc was \u201cunquestioned.\u201d<\/p>\n
\u201cThat does not mean we cannot have disagreements on the future of Greenland,\u201d he added.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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