Mertz seeks to ease trade tensions with Trump, while Macron takes a hard line: How can the US-EU Greenland dispute reignite the gold safe-haven rush?
2026-01-20 10:07:22
As Trump once again wielded the tariff weapon under the pretext of the Greenland issue, trade tensions between the US and Europe escalated sharply. German Chancellor Merz attempted to defuse the crisis through rational dialogue, while French President Macron opted for a hardline response, highlighting a clear divergence in the two leaders' strategies. This event not only tested the stability of the transatlantic alliance but also directly spurred global investors to turn to traditional safe-haven assets such as gold. Gold prices surged to record highs in the short term, reflecting deep market concerns about a potential trade war and global economic uncertainty.
German Chancellor Friedrich Merz made it clear on Monday (January 19) that the latest tariff threats from Trump should be responded to in a "calm and rational" manner to avoid escalating into a full-blown trade war.
Merz emphasized that Germany, as a highly export-dependent economy, would suffer a heavier blow should a trade conflict erupt. He acknowledged that France was affected by tariffs to a different degree and therefore understood the Macron government's tendency towards a tougher response, but stated that Germany would strive to reach a common position with France before Thursday's EU leaders' summit in Brussels.
Mertz revealed that he plans to meet with Trump in Davos on Wednesday to try to ease tensions through direct negotiations and believes there is still a viable path to protect Greenland and avoid a trade war through a joint solution.
He pointed out that Trump has made numerous tariff threats over the past year, but has often been able to avoid actual implementation through negotiations, a strategy he has consistently adhered to since taking office.
In stark contrast, French President Emmanuel Macron adopted a more confrontational stance. On Sunday (January 19), he publicly stated on social media platform X that no amount of intimidation or threats could shake Europe, and that tariff threats were completely unacceptable in the current context.
He called on the EU to respond in a united and coordinated manner, emphasizing France's firm commitment to upholding European sovereignty. Macron urged Brussels to immediately activate the EU's Anti-Coercion Instrument (ACI), a mechanism dubbed the "trade cannon" designed to strongly counter external economic coercion. Macron's remarks highlight France's long-standing stance on promoting European strategic autonomy, but have also raised concerns among major exporting countries like Germany about the potential consequences of retaliatory measures.
The differences between the two leaders are not accidental, but stem from differing considerations regarding their respective economic structures and relations with the United States. Germany has long been highly dependent on the US market, and its export sectors, such as automobiles and machinery, would face severe impacts if subject to high tariffs.
Therefore, Merz prefers to resolve the crisis through diplomatic dialogue to avoid escalating the conflict.
Merz also pointed out that France's slow progress in promoting trade agreements between Europe and the rest of the world (such as the Mercosur agreement) has prevented Europe from making substantial breakthroughs in reducing its dependence on the United States, further exacerbating Germany's dissatisfaction.
France, on the other hand, prioritizes upholding European sovereignty and strategic independence, with Macron consistently advocating for a reciprocal response to Trump's hardline stance. While activating the ACI tool demonstrates the EU's resolve, it could also trigger a chain reaction, leading to a full-blown escalation of US-EU trade friction.
While Merz did not completely rule out the possibility of European retaliation, he emphasized that the EU possesses various tools but hopes to avoid using them as much as possible. If they must be used, the extent will depend on the actual actions of the US. This cautious stance reflects Germany's buffer role in US-EU relations but could also create coordination difficulties within the EU.
The Greenland dispute between the US and the EU quickly escalated into a global market focus, directly stimulating a surge in safe-haven demand. Trump's threat to impose a 10% tariff on eight European countries starting February 1st, rising to 25% in June without a deal, was seen as "blackmail" against allies, triggering a sharp decline in European stock markets, a weakening dollar, and strong buying of gold as a typical safe-haven asset. Gold prices surged more than 1.5% on Monday, briefly hitting a record high of $4,690 per ounce, and are currently hovering around $4,670 per ounce, having risen approximately 6% since the beginning of the year.
Trade war concerns not only weaken the dollar's appeal but may also push up global inflation expectations, further strengthening gold's function as a store of value. The market generally believes that while Trump's "swing the hammer first, negotiate later" style is uncertain, it often forces concessions from opponents through pressure. However, once tariffs are implemented and trigger EU retaliation, the global economic growth outlook will dim, and the risk of supply chain disruptions will intensify, which will continue to support the bullish trend in gold. Analysts point out that gold has partially replaced the dollar's safe-haven status amidst current geopolitical turmoil, and breaking through $5,000/ounce in the short term is not out of the question.
Merz and Macron's disagreement on responding to Trump's tariff threats highlights structural contradictions within the US-EU alliance. Germany pursues pragmatic dialogue to protect its economic interests, while France emphasizes a hardline response to defend its sovereignty; this dynamic is unlikely to be resolved quickly in the short term.
The Greenland dispute has evolved into a broader trade and geopolitical crisis, with heightened risk aversion in the market driving gold prices to new highs.
Investors should pay close attention to the EU summit on Thursday and the possible Trump-Mertz meeting in Davos. If tensions fail to ease, gold's strong performance as the ultimate safe-haven asset is expected to continue, and the global asset allocation landscape may usher in a new round of profound adjustments.
At 10:05 Beijing time, spot gold was trading at $4,670.27 per ounce.
A stark contrast in the positions of US and EU leaders in the Greenland tariff dispute
German Chancellor Friedrich Merz made it clear on Monday (January 19) that the latest tariff threats from Trump should be responded to in a "calm and rational" manner to avoid escalating into a full-blown trade war.
Merz emphasized that Germany, as a highly export-dependent economy, would suffer a heavier blow should a trade conflict erupt. He acknowledged that France was affected by tariffs to a different degree and therefore understood the Macron government's tendency towards a tougher response, but stated that Germany would strive to reach a common position with France before Thursday's EU leaders' summit in Brussels.
Mertz revealed that he plans to meet with Trump in Davos on Wednesday to try to ease tensions through direct negotiations and believes there is still a viable path to protect Greenland and avoid a trade war through a joint solution.
He pointed out that Trump has made numerous tariff threats over the past year, but has often been able to avoid actual implementation through negotiations, a strategy he has consistently adhered to since taking office.
In stark contrast, French President Emmanuel Macron adopted a more confrontational stance. On Sunday (January 19), he publicly stated on social media platform X that no amount of intimidation or threats could shake Europe, and that tariff threats were completely unacceptable in the current context.
He called on the EU to respond in a united and coordinated manner, emphasizing France's firm commitment to upholding European sovereignty. Macron urged Brussels to immediately activate the EU's Anti-Coercion Instrument (ACI), a mechanism dubbed the "trade cannon" designed to strongly counter external economic coercion. Macron's remarks highlight France's long-standing stance on promoting European strategic autonomy, but have also raised concerns among major exporting countries like Germany about the potential consequences of retaliatory measures.
The root causes and potential impact of the differences in the response strategies of Germany and France
The differences between the two leaders are not accidental, but stem from differing considerations regarding their respective economic structures and relations with the United States. Germany has long been highly dependent on the US market, and its export sectors, such as automobiles and machinery, would face severe impacts if subject to high tariffs.
Therefore, Merz prefers to resolve the crisis through diplomatic dialogue to avoid escalating the conflict.
Merz also pointed out that France's slow progress in promoting trade agreements between Europe and the rest of the world (such as the Mercosur agreement) has prevented Europe from making substantial breakthroughs in reducing its dependence on the United States, further exacerbating Germany's dissatisfaction.
France, on the other hand, prioritizes upholding European sovereignty and strategic independence, with Macron consistently advocating for a reciprocal response to Trump's hardline stance. While activating the ACI tool demonstrates the EU's resolve, it could also trigger a chain reaction, leading to a full-blown escalation of US-EU trade friction.
While Merz did not completely rule out the possibility of European retaliation, he emphasized that the EU possesses various tools but hopes to avoid using them as much as possible. If they must be used, the extent will depend on the actual actions of the US. This cautious stance reflects Germany's buffer role in US-EU relations but could also create coordination difficulties within the EU.
How escalating trade tensions became the core driver of the surge in gold prices.
The Greenland dispute between the US and the EU quickly escalated into a global market focus, directly stimulating a surge in safe-haven demand. Trump's threat to impose a 10% tariff on eight European countries starting February 1st, rising to 25% in June without a deal, was seen as "blackmail" against allies, triggering a sharp decline in European stock markets, a weakening dollar, and strong buying of gold as a typical safe-haven asset. Gold prices surged more than 1.5% on Monday, briefly hitting a record high of $4,690 per ounce, and are currently hovering around $4,670 per ounce, having risen approximately 6% since the beginning of the year.
Trade war concerns not only weaken the dollar's appeal but may also push up global inflation expectations, further strengthening gold's function as a store of value. The market generally believes that while Trump's "swing the hammer first, negotiate later" style is uncertain, it often forces concessions from opponents through pressure. However, once tariffs are implemented and trigger EU retaliation, the global economic growth outlook will dim, and the risk of supply chain disruptions will intensify, which will continue to support the bullish trend in gold. Analysts point out that gold has partially replaced the dollar's safe-haven status amidst current geopolitical turmoil, and breaking through $5,000/ounce in the short term is not out of the question.
Conclusion: As the differences between the US and Europe continue to escalate, the safe-haven logic for gold becomes increasingly solid.
Merz and Macron's disagreement on responding to Trump's tariff threats highlights structural contradictions within the US-EU alliance. Germany pursues pragmatic dialogue to protect its economic interests, while France emphasizes a hardline response to defend its sovereignty; this dynamic is unlikely to be resolved quickly in the short term.
The Greenland dispute has evolved into a broader trade and geopolitical crisis, with heightened risk aversion in the market driving gold prices to new highs.
Investors should pay close attention to the EU summit on Thursday and the possible Trump-Mertz meeting in Davos. If tensions fail to ease, gold's strong performance as the ultimate safe-haven asset is expected to continue, and the global asset allocation landscape may usher in a new round of profound adjustments.
At 10:05 Beijing time, spot gold was trading at $4,670.27 per ounce.
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