Global financial markets tumbled on Tuesday, January 20, 2026, as escalating geopolitical and trade tensions triggered a broad risk-off sentiment. The sell-off was ignited by renewed tariff threats from former US President Donald Trump, who is seeking to purchase Greenland from Denmark.
Trump's tariff ultimatum targets eight European nations, with an initial 10% levy set for February 1, escalating to 25% by June 1 if a deal for Greenland is not reached. He further threatened 200% tariffs on French wines and champagne. The announcement has stoked fears of a new transatlantic trade war, with European leaders labeling the measures "unacceptable" and considering retaliatory actions, including deploying the EU's Anti-Coercion Instrument.
The market reaction was immediate and severe. In the United States, the Dow Jones Industrial Average plunged 618 points (1.2%), the S&P 500 fell 1.4%, and the technology-heavy Nasdaq Composite slid 2%. The Cboe Volatility Index (VIX) surged above 19, its highest level since November, indicating heightened fear. US Treasury yields spiked as investors fled to safety, while the US dollar weakened.
The contagion spread globally. Brazil's Ibovespa futures fell 0.49% to 165,665 points. Markets in the Asia-Pacific region closed mainly lower, and European stocks extended losses from the previous session. Commodities were also hit, with oil prices falling on supply concerns and iron ore prices in China declining for a fourth consecutive session.
Investor attention is now split between the ongoing corporate earnings season and high-stakes geopolitical developments. Trump is scheduled to speak at the World Economic Forum in Davos, where he plans to press his case for Greenland with European leaders. Concurrently, the US Supreme Court is anticipated to issue opinions on pending lawsuits, including one concerning the validity of Trump's trade tariffs, which could further impact global trade flows and market confidence.
