European Stocks Extend Losses: Trump’s Greenland Tariff Threats Spark Trade War Fears

European equity markets faced a second day of heavy selling on Tuesday, with the STOXX 600 index dropping 0.7% as investors braced for a renewed transatlantic trade war. The sell-off followed President Donald Trump’s warning that eight European nations—including Germany, France, and the UK—could face escalating tariffs starting February 1st unless they facilitate the U.S. purchase of Greenland.

The luxury and spirits sectors took a direct hit, with LVMH and Pernod Ricard sliding after Trump threatened a massive 200% tariff on French wine and champagne to pressure President Emmanuel Macron. While Renault shares managed a 1.6% gain following strong 2025 sales data, the broader market remained cautious as global leaders gathered for the World Economic Forum in Davos, where the Greenland dispute is expected to dominate political discussions.