The 2026 World Economic Forum (WEF) in Davos, Switzerland, has been dominated by geopolitical tensions and market anxieties, primarily stemming from renewed U.S. efforts to acquire Greenland. President Donald Trump, attending his first Davos summit since 2020, arrived with the largest U.S. delegation ever assembled, including Treasury Secretary Scott Bessent.
The core conflict revolves around Trump's threat to impose escalating tariffs on eight European nations—Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain—if a deal on Greenland is not reached. The plan outlines a 10% tariff starting February 1, 2026, escalating to 25% by June 1. Trump stated, "we have to have it" regarding the island, creating significant strain with European allies. European Commission President Ursula von der Leyen warned that such tariffs "would undermine transatlantic relations and risk a dangerous downward spiral."
The geopolitical drama was reflected in the summit's absences. Notably, China's Xi Jinping, India's prime minister, and Brazil's leadership are not attending. Denmark has opted out entirely as tensions over Greenland escalate. The official WEF theme, "A Spirit of Dialogue," contrasts sharply with the reality of what one European delegate described as a forum that "now feels less like damage control for geopolitics."
These tensions are rippling through financial markets. While oil prices (Brent at $64, WTI below $60) held relatively steady as traders weighed China's better-than-expected 5.0% GDP growth for 2025 against oversupply concerns, broader market sentiment is cautious. The tariff threats have bruised the U.S. dollar and contributed to uncertainty. Analysts note that crypto markets are showing divergence rather than uniform "risk-on" behavior, with Bitcoin down 16% over the prior three months amid the geopolitical risk premium.
Market analysts express concern about the broader economic impact. "The outlook for a large surplus suggests prices should trend lower, while the potential for a further escalation in US-EU tensions poses further downside risk," said Warren Patterson of ING Groep NV. The event has shifted the focus of Davos from future-oriented tech promises to immediate firefighting on trade and geopolitical fractures, acting as a "soft census of global power."
