Weekly Buzz: Trump waves tariffs at Europe, again

The US president threatened eight EU nations with tariffs over the weekend, in a push to acquire Greenland. Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland were set to face 10% duties. By Wednesday, he'd called the whole thing off.

What’s going on here?

Greenland's prime minister has made it clear the territory isn't for sale. European leaders have been equally direct: the EU is now weighing €93 billion ($108 billion) in retaliatory tariffs, and France has pushed to activate the Anti-Coercion Instrument. The so-called “trade bazooka” allows the bloc to respond collectively when a non-EU country uses economic pressure to push policy. Ironically, it was designed with China in mind, not traditional allies.

Europe is a key supplier of high-value goods to the US, from German cars and French aircraft to cutting-edge pharmaceuticals. Final assembly and precision engineering remain on the continent, even when parts are sourced globally.

Trump didn't specify whether these tariffs stack on top of existing duties, currently 15% for EU goods and 10% for UK products. The US Supreme Court is also poised to rule this week on whether Trump's use of emergency powers to impose last year's sweeping Liberation Day tariffs was legal in the first place.

Markets responded swiftly. Tuesday was the first trading day since Trump's weekend announcement, and US stocks had their worst session since October last year: the S&P 500 fell 2.1%, while the Dow and Nasdaq shed 1.8% and 2.4% respectively. Gold, meanwhile, did what gold does in times of uncertainty, surging past US$4,800 an ounce as investors moved to safety. On Wednesday, Trump called the tariffs off after meeting with NATO Secretary General Mark Rutte at Davos. Markets promptly reversed course.

What’s the takeaway for investors?

We’ve seen this playbook before. Trade tensions flare, markets wobble, and eventually both sides find a compromise. Whether this latest round escalates or fizzles remains to be seen, but history suggests that tariff-related volatility tends to be short-lived.

The lesson for long-term investors hasn't changed: diversification matters. When one part of the market stumbles, other regions step up, and safe-haven assets like gold provide ballast. Stay invested, stay diversified, and let short-term noise stay in the short term.

(General Investing is an easy way to get started with a diversified portfolio focused on the long term.)

In Other News: China and Canada find common ground

China and Canada struck a trade deal last week, in what seems to be a strategic pivot for both nations. China will cut tariffs on Canadian canola seed to about 15%. In return, Canada will allow Chinese EVs into its market at a 6% tariff, down from the 100% imposed in 2024.

Canada traded around US$86 billion with China in 2024, and nearly $909 billion with the US. With Washington threatening tariffs and floating the idea of making Canada its 51st state, however, Ottawa is now looking to diversify. China, meanwhile, is eager to cooperate with a G7 nation, especially as its US exports fell 20% last year.

This move won't transform Canada's trade balance overnight. The country still sends about 67% of its exports south to the US. It does, however, signal a broader trend: nations are building their own partnerships in the face of US tariffs. China’s exports were nearly 7% higher in December than a year earlier, even as shipments to the US fell 20%.

It's another reason why global diversification matters. As traditional trade relationships come under pressure, new ones are forming. Portfolios positioned across regions are better placed to benefit from these shifts, wherever they emerge.