The EU is preparing to impose tariffs on the US! Bitcoin plummets, crypto market liquidates $600 million

Trump weekend threats to impose tariffs on 8 European countries unless a “purchase of Greenland” agreement is reached. Starting February 1, tariffs will be 10%, rising to 25% in June. The EU held an emergency summit to discuss countermeasures, with French President Macron advocating for the use of the Anti-Coercion Instrument (ACI), and Italian Prime Minister Meloni seeking diplomatic solutions. On Monday, Bitcoin dropped below $92,000, plunging 3.6%, with the crypto market liquidating $600 million, while safe-haven asset gold surged to a record high.

Trump’s tariff threats escalate, Greenland becomes a trigger

(Source: The Financial Times, UK)

Donald Trump insists that Greenland is vital to U.S. security and does not rule out the possibility of forcefully seizing the island. Over the weekend, Trump proposed new tariffs on eight European countries, leading to declines in risk assets, increased demand for safe havens, and a sharp drop in cryptocurrency prices. Trump stated that unless a “purchase of Greenland” agreement is reached, he will impose a 10% tariff on goods from these eight European countries starting February 1, with tariffs rising to 25% in June.

This threat marks a dangerous escalation in transatlantic relations. Greenland is an autonomous Danish territory with about 56,000 residents, strategically located. It lies within the Arctic Circle, controls Arctic shipping routes, and is rich in rare earth minerals. Trump had previously proposed buying Greenland during his first term, which was firmly rejected by the Danish government. Now, he is back at it, not only reasserting the purchase demand but also tying it to tariff threats, turning this geopolitical issue into an economic coercion.

European leaders, less than a year into Trump’s second term, now face a rollercoaster that seems to have reached a dangerous turning point. The White House is using economic punishment threats to pressure countries that support Denmark’s territorial integrity within the EU. The president’s remarks have drawn European leaders’ condemnation, and they are now prepared to halt approval of trade agreements reached last year.

In the coming days, EU leaders will hold an emergency summit on this issue. If the EU adopts similar retaliatory measures, a full-scale trade war with the U.S. could erupt. If the bloc does not act, will Trump see the 27-nation group as weak and divided, and too afraid to stop his threats to acquire Greenland—whether through purchase or force? This dilemma puts the EU in a very awkward position.

Timeline and escalation of Trump’s tariff threats

Starting February 1: 10% tariffs on goods from 8 European countries

June escalation: Tariffs increase to 25%

Precondition: Unless the EU supports the U.S. in purchasing Greenland or facilitates a deal

Potential expansion: If the EU retaliates, measures could extend to more countries and product categories

This phased escalation strategy is typical of Trump’s negotiation tactics. First, exert limited pressure to test the response; if no concessions are made, then escalate gradually. Economically, a 10% tariff is already significant enough to cause substantial losses for European exporters, while a 25% tariff could completely alter trade flows. For Europe’s automotive, machinery, and chemical industries, such tariffs would severely weaken their competitiveness in the U.S. market.

EU’s first use of anti-coercion tool, internal divisions emerge

French President Macron stated that it is time to deploy the EU’s “trade heavy artillery” for the first time. This is the Anti-Coercion Instrument (ACI), which will allow Europe to take countermeasures such as retaliatory tariffs, restricting access to the single market, and blocking lucrative EU contracts. Ironically, this weapon was originally designed to counter external hostile bullying, initially aimed at China rather than the U.S.

The anti-coercion tool officially took effect in 2023, adding a new weapon to the EU’s economic diplomacy arsenal. It enables the EU to swiftly and specifically respond to economic coercion from third countries without lengthy WTO dispute procedures. The tool was initially conceived to counter China’s economic sanctions against Lithuania and other emerging geopolitical threats. Few expected it to be used first against the U.S.

Currently, some EU leaders are tired of Macron’s approach, including Italian Prime Minister Giorgia Meloni, who has a better relationship with Trump than most. She mentioned that some European countries, including Denmark, recently sent troops to Greenland, citing “understanding and communication issues,” but did not specify what misunderstandings might exist. If this move was meant to appease Trump and suggest his views on strengthening Arctic security are correct, then seeing these troops seems to have only angered him further, prompting his latest threats.

Meloni’s explanation of misunderstandings during the translation process opens a door for a more diplomatic response to this EU-Trump tariff crisis. Her stance represents the EU’s moderate faction, favoring dialogue and compromise over immediate trade war. In contrast, Macron’s hardline stance reflects the EU’s hawks, insisting that a strong response to Trump’s threats is necessary, or else more unreasonable demands will follow.

The Sunday emergency meeting of EU ambassadors in Brussels was a low-key session, different from routine high-level summits. It remains unclear who will take the next step, or whether Trump will ease or escalate his latest threats. The EU is unlikely to reach quick consensus on such a sensitive issue, and internal divisions may be exactly what Trump hopes to see.

Crypto market suffers as Bitcoin drops below 92,000, $600 million liquidated

(Source: Bloomberg)

Affected by Trump’s tariff threats, early Monday, Bitcoin’s price fell 3.6%, breaking below $92,000, with other tokens falling even more. The second-largest digital asset, Ethereum, declined 4.9%, and Solana dropped 8.6%. CoinGlass data shows that approximately $600 million in crypto long bets were liquidated in the past 24 hours.

This sell-off pattern is typical of risk-off market behavior. When geopolitical risks rise, investors tend to sell risk assets first and shift into traditional safe havens. Although cryptocurrencies are supported by some as “digital gold,” in actual market behavior, they are still classified by most investors as high-risk assets, sold off first during crises.

Richard Galvin, co-founder of hedge fund DACM, said this is seen as a “rebound from oversold levels, which were triggered by tax-loss selling and end-of-year panic selling.” He added that recent tariff fears suppressed this rebound, and the record high gold prices confirm that this sell-off was “more driven by risk aversion than issues with cryptocurrencies themselves.”

After a sluggish end to 2025, digital assets started the year well, having failed to recover from the brutal sell-off in October. On January 14, Bitcoin neared $98,000, with large inflows into Bitcoin ETFs listed in the U.S. However, Trump’s tariff threats completely reversed this optimism, and the market shifted from greed to panic within days.

BTC Markets analyst Rachael Lucas said, “If the current support level fails, traders see $90,000 as the next target; bulls believe institutional demand could be a potential bottom.” Technical analysis shows that around $92,000 is a key support zone; if broken, the next support is at the round number of $90,000.

Safe-haven assets surge, gold hits record high

Contrasting sharply with the crypto crash, traditional safe-haven assets performed strongly under Trump’s tariff threats. Following the news, U.S. stock index futures plunged at Monday’s open, while safe assets gold and silver soared to record highs. This market divergence clearly demonstrates a shift in investor risk appetite: selling all risk assets and embracing traditional safe havens.

The record high in gold is significant, reflecting not only short-term safe-haven demand but also deep concerns about the global economy and geopolitical outlook. When gold prices break previous highs, it usually indicates a loss of confidence in fiat currencies, stock markets, and economic growth. Trump’s tariff threats target not only the EU but could extend to other trade partners, and this uncertainty is driving global capital reallocation.

Europe is doing its best to appease Trump during his second term. Some praise this as shrewd, others see it as flattery. But now, it’s clear that he is not only raising a transatlantic diplomatic bridge but also threatening to blow it up entirely. If such extreme rhetoric is actually implemented, it could reshape the global trade order and Western alliances established since World War II.

For the crypto markets, the evolution of the EU-U.S. tariff war will be a key variable in the coming weeks. If a full trade war erupts, global recession risks increase, and Bitcoin could continue under pressure. But if a compromise is reached, market sentiment could quickly recover, and Bitcoin might retest the $98,000 high.