Gold surged and stock markets across Europe and Asia moved into the red after Donald Trump’s latest tariff threat over Greenland, according to investment experts.
Jason Hollands, the managing director of online investment platform Bestinvest by Evelyn Partners, said the situation has created fresh uncertainty for investors.
He said: “The latest broadside from President Trump and the response of UK and EU leaders will be concerning investors as tensions over Greenland threaten a ‘new’ trade war.
“Just when consensus was adjusting to a rosier scenario for 2026 – with expectations that economic growth would pick up as the uncertainties around last year’s imposition of tariffs and impact on inflation had faded – along comes a fresh threat of major diplomatic and trade discord between the US and its supposed European allies.
“Prime Minister Keir Starmer tried to tread a very fine line at a press conference this morning: while emphasising the sovereignty of Greenland and Denmark, he departed from the EU’s hardening line with a more conciliatory tone, talking down tariff retaliation and emphasising dialogue with Washington.
“At times like these private investors should remember the lessons from the market volatility in the immediate aftermath ‘Liberation Day’. Of course, if implemented the latest tariff threats would be economically damaging, and this uncertainty creates a febrile, short-term environment for the markets. But after April 2, last year, when President Trump first revealed the size of his tariff bombshell, markets sold off aggressively for not much more than a week before rebounding quite rapidly.
“Trump’s playbook over numerous issues is to drop a shocking opening gambit, only to de-escalate, which has led critics to coin the “TACO” – Trump Always Chickens Out – put-down. While a pull back from the brink cannot be relied upon, it remains to be seen whether the use of tariffs in this way is even legal under US law, or indeed whether such a position will carry the support of Republicans in Congress.
“An economically damaging trade war could severely impact the Republicans’ chances in the November mid-term elections, which risk a losing the administration its majority in Congress. Sometimes, indeed quite often, the right thing for investors to do is try and stay calm and not panic sell in the face of worrying headlines and market jitters.
“The seemingly relentless rise of gold is a reminder of the role it can play as a form of “portfolio insurance”, although the precious metal can also suffer volatility. Most of Bestinvest’s ready-made portfolios have benefitted from a c.4.5% allocation to gold through an exchange traded commodity, and we have also seen these rise in popularity with clients who make their own investment decisions over the last year.”
