US stock futures experienced a significant decline late Monday night, hinting at a tumultuous start to trading as President Trump intensified trade tensions with Europe over the contentious issue of Greenland. This development has heightened fears of tariffs just as Wall Street braces for the upcoming earnings season.
The Dow Jones Industrial Average futures indicated a drop of 0.8%, suggesting a potential fall of approximately 400 points at Tuesday’s opening. Meanwhile, S&P 500 futures dipped nearly 1%, and Nasdaq 100 futures fell by about 1.2%.
This market reaction follows Trump’s announcement over the weekend about imposing extensive tariffs on imports from eight NATO countries unless negotiations for the “complete and total purchase of Greenland” begin. In retaliation, European officials are reportedly discussing imposing tariffs of up to $108 billion, which could result in an economic fallout of approximately $8 trillion.
In a post on Truth Social, Trump specified that US tariffs against the European Union would commence at 10% on February 1 and escalate to 25% by June 1. European leaders swiftly condemned this threat, labeling it as “unacceptable.” As the situation unfolds, Trump is also scheduled to speak at the World Economic Forum in Davos, Switzerland, on Wednesday, adding further intrigue to the ongoing discussions.
Compounding the market’s anxiety, a critical legal situation is shaping up. The Supreme Court may soon decide on the constitutionality of Trump’s use of the International Emergency Economic Powers Act to impose tariffs. Treasury Secretary Scott Bessent expressed doubt that the court would overturn what he termed the president’s signature economic policy.
Global unease has been further amplified by escalating civil unrest in Iran, where a local official reported that at least 5,000 individuals have lost their lives in widespread protests that originated in December over economic hardship. These protests have since evolved into broader anti-government demonstrations.
US equities are coming off a challenging week, with the S&P 500 down 0.4%, the Dow dropping by 0.3%, and the Nasdaq Composite sliding 0.7%. As investors look forward to a busy earnings slate, key results are pending from major companies like Netflix, Intel, and Johnson & Johnson. Corporate guidance will be keenly observed, especially given that analysts predict the S&P 500 could achieve earnings growth of about 12% to 15% this year, although significant downside potential exists if the “Sell America” sentiment continues to gain traction.
The uncertainty surrounding oil prices also remains, as concerns over EU-US trade tensions escalate amid the Greenland controversy.
