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stocks issues market commentary from deVere Group.
Europe’s consideration of using capital markets as retaliation
against President Trump over Greenland would trigger financial
disruption far exceeding the impact of tariffs, warns the CEO of
global financial advisory giant deVere Group.
Nigel Green’s warning comes as the European Union is reportedly
weighing deployment of its Anti-Coercion Instrument while preparing up
to €93 billion in retaliatory tariffs against the US.
The measures would follow Trump’s warning that tariffs could
rise to 25% unless Europe agreed to a deal involving Greenland.
Trump’s appearance at the World Economic Forum in Davos tomorrow
is likely to place the dispute at the centre of a summit normally
designed to project stability. Instead, trade, geopolitics, and
financial leverage is expected to dominate discussions.
Overnight, Trump posted on Truth Social an AI-generated image of
himself alongside Vice President JD Vance and Secretary of State Marco
Rubio in the Oval Office, with Greenland, Canada, and Venezuela shown
beneath the Stars and Stripes.
Nigel Green, CEO of deVere Group, says:
“If the Europeans detonate the Anti-Coercion Instrument, this
would no longer be a trade dispute.
“Capital markets themselves would be weaponized to become a
tool of geopolitical pressure.
“Tariffs would hit exporters. Capital pressure would hit
confidence, currencies, bonds, and equities all at once.”
Europe would hold substantial theoretical leverage. European countries
would collectively own around $8 trillion of US bonds and equities,
making them America’s largest external financiers.
NATO allies alone would hold close to $3 trillion in US Treasuries.
“This exposure would give Europe influence that tariffs could
never match,” notes the deVere chief executive.
“The US relies on foreign capital to fund its deficits. This
reliance would be the pressure point.”
However, he warns that leverage would come with severe limitations.
“Capital markets do not obey political instruction. They
reprice, and once that process starts it would not stay
contained.”
Europe would also face a structural problem. There would likely be no
credible alternative destination for capital on the scale required to
materially reduce US exposure. Asian markets would lack sufficient
depth. Global portfolios could be expected to remain anchored to US
assets because of liquidity, legal certainty, and scale.
“Europe wouldn’t be choosing between the US and a clean
substitute,” says Nigel Green.
He continues: “A move against US capital markets would push up
US yields and would pressure the dollar.
“It would also tighten global liquidity and rebound into
European banks, pension funds, and corporates that rely on dollar
funding.”
The Anti-Coercion Instrument itself would amplify uncertainty.
It’s never been used. Its procedural timelines would risk
prolonging instability rather than delivering resolution.
“This would stretch political risk over weeks or
months,” Nigel Green says. “Markets dislike nothing more
than unresolved pressure.”
Trump’s current posturing would suggest little appetite for
retreat. His Davos attendance is likely to coincide with an
increasingly forceful public stance rather than compromise.
deVere concludes that while the risks of deploying capital-based
measures would be significant for Europe, the more important signal
lies in the fact that such options would now be openly discussed.
“The Anti-Coercion Instrument would not be on the table
lightly. It carries costs for Europe as well as the US.
“The fact that it is being publicly reported would indicate
that policymakers see the threat as serious and escalating.
“The moment capital measures are discussed, markets could
begin to price the possibility,” explains Nigel Green.
“This alone would tighten conditions and raise
uncertainty.”
The Greenland dispute would therefore mark a shift in how far Europe
might be prepared to go.
The deVere CEO concludes:
“This would be Europe signalling that conventional trade
retaliation may no longer be sufficient. The risks of escalation
would be real, but so would the message that the red lines have
moved.”
“The most important development right now is not what Europe
does immediately, but what it’s now prepared to
consider.”
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