Rates as leverage
Trump said the tariffs would remain in place “until a deal is reached for the complete and total purchase of Greenland,” arguing that U.S. control of the island is essential to counter Chinese and Russian ambitions in the Arctic. Denmark and its European allies rejected those demands, leading to a rare show of unity among European leaders, who reacted with outrage on Saturday.The threat also drew criticism from US lawmakers, including some members of the president’s own party. Adding to the uncertainty, the U.S. Supreme Court is currently considering whether to overturn the legal authority Trump used to threaten tariffs under the International Emergency Economic Powers Act. If the court rules against him, Trump may not be able to impose the new tariffs.
The proposed duties would likely be imposed on top of existing tariffs, currently 10% on British imports and 15% on imports from the European Union, raising questions about retaliation and the wider impact on global trade. Although tariffs are paid by importers, the costs are often passed on to U.S. consumers, complicating the inflation outlook.
Safe ports in demand again?
For investors, the immediate response was a renewed bid for safe-haven assets. Market participants say the Greenland tariff threat poses the risk of escalating geopolitical tensions, a backdrop that tends to support precious metals.
Jateen Trivedi, VP Research Analyst of Commodity and Currencies at LKP Securities, said gold has remained resilient amid a mix of global crisis moments. “Gold traded in a flat to positive range and remained firm near Rs 1,43,150 in MCX and around $4,605 on Comex, while prices remained comfortably above $4,600,” he said.
“Ongoing geopolitical uncertainty between the US and Iran continues to provide support even as Washington has indicated that there will be no immediate military intervention if Iran refrains from escalating actions,” Trivedi added. “However, the situation remains fluid with new global pressure points, including a renewed strategic focus on Greenland, keeping risk sentiment high.” In such an environment, he said, gold continues to attract demand for premium safe havens as an alternative to the dollar, with prices expected to remain volatile in the near term within a wide range of Rs 1,41,000 – Rs 1,45,000 as markets approach the US Federal Reserve’s January policy meeting. Silver, which often follows gold in periods of heightened uncertainty, is also expected to remain sensitive to geopolitical developments.
India: Volatility Now, Opportunities Later?
For Indian equities, the implications are more mixed. Market experts expect short-term volatility if Trump’s tariff threats turn into a broader trade dispute, but see potential long-term upside to come from the disruption.
Analysts say the impasse could accelerate negotiations on a long-pending free trade deal between India and the EU, with talks already in their final stages. Following Trump’s tariff threats against European countries, the EU and India are expected to push for a concrete agreement. Over time, such an agreement could boost the Indian economy across sectors, including pharmaceuticals, textiles, gems and jewelry, steel and metals, automobiles, solar power plants and leather.
Indian markets ended this week on a cautiously positive note, despite global uncertainty. The Sensex on Friday rose 188 points, or 0.23%, to close at 83,570.35, while the Nifty gained 29 points, or 0.11%, to end at 25,694.35, breaking a two-session losing streak. The recovery was led by strong buying in IT and banking stocks, with Infosys, TCS and Tech Mahindra among the biggest gainers.
Profits, data and global signals in the future
Vinod Nair, head of research at Geojit Investments, said investor sentiment is fluctuating between optimism and caution. “Indian equities ended the week with marginal gains as sentiment fluctuated between optimism over renewed India-US trade talks and caution due to ongoing geopolitical tensions,” he said, noting that prolonged global tensions have made foreign institutional investors more risk averse to emerging markets and added upward pressure on bond yields.
Looking ahead, Nair said market sentiment would be driven by global macro indicators such as US PCE inflation, GDP data and unemployment claims, which will provide clues about the Federal Reserve’s interest rate outlook. Domestically, PMI figures, corporate earnings and management commentary will be closely watched.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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