Investorideas.com (www.investorideas.com Newswire), a go-to platform for big investment ideas including crypto stocks, publishes market commentary from deVere Group.
Europe’s consideration of using capital markets in retaliation against President Trump over Greenland would trigger financial disruption far beyond the impact of the tariffs, the CEO of global financial advisory giant deVere Group has warned.
Nigel Green’s warning comes as the European Union is reportedly considering deploying its anti-coercion tool as it prepares up to €93 billion in retaliatory tariffs against the US.
The measures would follow Trump’s warning that tariffs could rise to 25% unless Europe agrees to a deal involving Greenland.
Trump’s appearance tomorrow at the World Economic Forum in Davos is likely to put the dispute at the center of a summit normally intended to bring stability. Instead, trade, geopolitics and financial influence are expected to dominate the discussions.
Overnight, Trump posted on Truth Social an AI-generated image of himself next to Vice President JD Vance and Secretary of State Marco Rubio in the Oval Office, with Greenland, Canada and Venezuela among the Stars and Stripes.
Nigel Green, CEO of deVere Group, says:
“If the Europeans detonate the Anti-Coercion Instrument, this would no longer be a trade dispute.
“Capital markets themselves would be weaponized to become an instrument of geopolitical pressure.
“Tariffs would hit exporters. Capital pressures would hit confidence, currencies, bonds and stocks all at once.”
Europe would have significant theoretical influence. European countries would collectively own about $8 trillion in U.S. bonds and stocks, making them America’s biggest external lenders.
NATO allies alone would hold nearly $3 trillion in US government bonds.
“This exposure would give Europe leverage that tariffs could never match,” notes the deVere CEO.
“The US is dependent on foreign capital to finance its deficits. This dependence would be the pressure point.”
However, he warns that the leverage would come with serious limitations.
“Capital markets do not obey political instructions. They reprice, and once that process starts, it will be out of control.”
Europe would also face a structural problem. There would likely be no credible alternative destination for capital on the scale necessary to substantially reduce US exposure. The Asian markets would not have sufficient depth. Global portfolios can be expected to remain anchored in US assets for reasons of liquidity, legal certainty and scale.
“Europe would not choose between the US and a clean substitute,” says Nigel Green.
He continues: “A move against US capital markets would push up US interest rates and put pressure on the dollar.
“It would also tighten global liquidity and draw back on European banks, pension funds and companies that rely on dollar financing.”
The anti-coercion instrument itself would increase uncertainty. It has never been used. Its procedural deadlines would risk prolonging instability rather than reaching a solution.
“This would stretch the political risk over weeks or months,” says Nigel Green. “Markets don’t like unresolved pressure anymore.”
Trump’s current stance would suggest little appetite for retreat. His presence at Davos will likely coincide with an increasingly strong public stance rather than compromise.
deVere concludes that while the risks of deploying capital-based measures would be significant for Europe, the most important signal lies in the fact that such options would now be openly discussed.
“The Anti-Coercion Instrument would not just be on the table. It entails costs for both Europe and the US.
“The fact that it is being reported publicly would indicate that policymakers view the threat as serious and escalating.
“As capital measures are discussed, markets could start to price this opportunity,” explains Nigel Green.
“This alone would exacerbate conditions and increase uncertainty.”
The Greenland conflict would therefore mark a shift in the extent to which Europe might be willing to go.
The CEO of deVere concludes:
“This would signal to Europe that conventional trade retaliation may no longer be enough. The risks of escalation would be real, but so would the message that the red lines have shifted.”
“The most important development right now is not what Europe does immediately, but what it is now prepared to consider.”
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