Trump’s latest Greenland TACO

In one of the more surreal episodes of his second presidency, Donald Trump used his address at the World Economic Forum in Davos this week to revive his long-standing fixation on acquiring Greenland — but ended up confusing audiences and the markets instead.

Trump has suggested repeatedly that the United States should own Greenland, a vast Arctic territory of the Kingdom of Denmark, on the grounds of national security and strategic rivalry with Russia and China. That push has put him at odds with both Copenhagen and Nuuk — and now even with his own internal messaging team.

At Davos, Trump’s case for Greenland took an unintentional comedic turn. Multiple times during his speech, he referred to Iceland when he meant Greenland, even attributing a recent market dip to “Iceland.”  The White House later insisted he didn’t actually mix up the two, but the tape tells a different story, spawning widespread headlines and social ridicule.  For much of the audience, it undercut whatever geopolitical point the president was trying to make — raising questions about his grasp of basic geography at a gathering of world leaders.

That confusion is more than just TV clip fodder. Financial markets reacted sharply to Trump’s Greenland escalation before he spoke, with U.S. stocks selling off amid fears of a transatlantic trade clash. Analysts pointed to a surge in the so-called “sell America” trade as investors moved out of U.S. assets in response to the geopolitical noise.

On Tuesday, major indexes plunged — the Dow lost nearly 900 points and the S&P 500 slumped as concerns about proposed tariffs on European allies mounted.  European holdings of U.S. bonds and equities — roughly $8 trillion worth — were highlighted as a potential pressure point, underscoring how geopolitical instability can ripple through global capital markets.

Faced with growing pushback — both diplomatic and financial — Trump appeared to back off some of his more aggressive rhetoric. In his Davos remarks he ruled out using military force to take over Greenland and later announced via social media that he had struck a “framework” agreement with NATO Secretary General Mark Rutte, effectively shelving planned tariffs on European countries opposed to his Greenland ambitions.

That pivot spurred a rally in U.S. equities as traders dusted off the familiar pattern of pricing in Trump’s dramatic threats — only for markets to bounce back when he steps back from the brink. “Trump has a history of big threats that send financial markets sliding, only to pull back later,” one Wall Street strategist noted.

Yet the diplomatic frictions remain unresolved. Denmark has insisted that Greenland’s sovereignty is non-negotiable, and Greenlanders themselves have fiercely rejected the notion that their homeland is for sale.  Thus, even as Trump tries to cast his latest turn of phrase as a diplomatic success, both allies and markets are left parsing what —if anything — his Greenland gambit actually achieved.