Just days before global leaders converge in Davos, Switzerland, for the annual World Economic Forum, former U.S. President Donald Trump has escalated tensions with a tariff threat that analysts warn could spark the most severe transatlantic crisis in decades.
A Provocative Tariff Threat Over Greenland
Over the weekend, Trump took to social media to declare he would impose a 10 per cent tariff on eight European nations, a levy set to rise to 25 per cent in June. This punitive measure targets countries opposing his stated ambition for the "complete and total purchase of Greenland" by the United States, a proposition he has suggested could be pursued by military means if necessary.
This move blatantly disregards existing trade agreements with the European Union and the United Kingdom. In retaliation, E.U. governments are reportedly considering countermeasures valued at approximately 93 billion euros, which could involve tariffs on U.S. goods or restrictions blocking American companies from the bloc's markets, according to the Financial Times.
WEF Report Sounds the Alarm on 'Geoeconomic Confrontation'
The timing of Trump's threat appears to validate the dire warnings in the WEF's Global Risks Report 2026, released last week to set the agenda for the Davos meetings. The report starkly declares, "As we enter 2026, the world is balancing on a precipice."
It highlights an era where the foundational rules of international stability are under siege, with trade, finance, and technology being wielded as weapons. This "geoeconomic confrontation" has surged to become the top immediate global risk in the forum's survey of 1,300 leaders and experts, displacing last year's leading concern, "state-based armed conflict," to second place.
The survey reflects the sustained global turmoil stemming from Trump's earlier tariff wars, which upended the international trading system. Mark Elsner, the WEF’s head of Global Risks Initiative, cautioned that the situation could deteriorate far beyond tariffs. "While we may be getting used to tariffs, there is a risk for geoeconomic confrontation to turn into full-scale economic war with port blockades, export restrictions for key goods, cancelled contracts and capital controls, to name just a few," Elsner stated.
Broadening Economic Perils and the Davos Stage
The WEF report notes a sharp increase in the number of respondents anticipating a "stormy" or "turbulent" outlook over the next two years. Alongside geoeconomic confrontation, the risks of an economic downturn and persistent inflation recorded significant climbs in the ranking. The threat of a major asset bubble bursting also jumped seven positions.
Elsner pointed to a dangerous cocktail of mounting debts, economic downturn, and uncertain returns on investments in frontier technologies like AI and quantum computing. "Add geoeconomic confrontation into this mix, and the impact could destabilize not only businesses but entire societies," he warned.
Amid this fraught backdrop, Donald Trump is poised to take centre stage at Davos this week. He will attend alongside U.S. Treasury Secretary Scott Bessent and Secretary of State Marco Rubio, leading the largest American delegation ever sent to the forum. The former president is scheduled to address the gathering on Wednesday, ensuring all eyes will be on his next move in an increasingly volatile global landscape.
