A Framework Nobody Expected
In a notable development, the proposed Greenland deal actually respects Denmark's sovereignty over the island. After weeks of Trump insisting he'd only accept full U.S. control, he emerged from his Davos meeting calling the framework something that "gives us everything we needed."
What investors should note about this development:
- Trump announced he will not follow through on Feb. 1 tariffs against eight European allies
- The deal focuses on expanded U.S. military access and strategic positioning rather than acquisition
- Denmark and Greenland maintain sovereignty while the U.S. gains Arctic access
- Both sides have room to frame this as a positive outcome
The market implications are significant...
What appeared to be the beginning of a NATO rift and trade conflict is now being positioned as a negotiation success—a pattern that echoes the Liberation Day tariff situation from last April.
Echoes of Liberation Day
Folks who navigated the April 2025 tariff situation may recognize this setup. Back then, Trump announced broad tariffs against numerous countries. Markets sold off. Fear spread. Media coverage turned dire.
What followed:
- Trump walked back most of the tariffs within weeks
- Markets stabilized and found a middle ground
- Indices recovered and eventually reached new highs
- Investors who sold during the panic missed the subsequent rally
A similar dynamic could be forming now, though each situation has its own variables and nothing is guaranteed.
The Supreme Court Factor
One significant catalyst remains on the horizon. The Supreme Court could rule as early as this week on whether Trump has the authority to use emergency powers for tariffs.
Key factors worth watching:
- Trump has been using IEEPA (a 1977 law designed for sanctions) to impose tariffs
- Lower courts ruled he exceeded his authority
- Justice Gorsuch questioned whether Congress can ever reclaim this power
- Justice Roberts noted tariffs have "always been the core power of Congress"
- Prediction markets show roughly 28% probability the court rules in Trump's favor
If Trump loses, companies could potentially see refunds on over $130 billion in tariff collections, and sectors with heavy supply chain exposure abroad could benefit. However, administration officials indicate they have alternative statutory tools to maintain tariff policy regardless of the outcome.
Understanding the Pattern
For investors trying to make sense of this volatility, a general pattern tends to emerge in these situations:
Phase 1 – Initial reaction headlines dominate. Markets pull back. Uncertainty increases. This is often when emotional decisions get made.
Phase 2 – Escalation emergency meetings occur. Media coverage intensifies. Both sides stake out positions. This phase typically lasts days rather than weeks.
Phase 3 – Negotiation back-channel discussions begin surfacing publicly. "Productive" language appears from both sides. Flexibility emerges.
Phase 4 – Resolution deals get announced. Tariffs are paused or adjusted. Markets respond to reduced uncertainty.
With the Rutte framework announcement, the situation may be moving from the initial reaction phase toward negotiation faster than anticipated.
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