"It's been a couple of weeks since Donald Trump and his cohort tried to bully the U.S.'s European allies into submission over Greenland, but the reverberations are still being felt. "There was a real sense that we were witnessing a moment of rupture," Eswar Prasad, an economist at Cornell University and the Brookings Institution, who was attending the annual World Economic Forum, in Davos, Switzerland, when Trump flew in, recounted to me."
"The geostrategic implications of this realization are still coming into focus, as many governments around the world ponder the warning from Mark Carney, the Prime Minister of Canada, that "middle powers" need to come together in self-defense. In the financial markets, where things move faster, there has already been a dramatic reaction-one that has raised new questions about U.S. economic leadership and the dollar's long-standing status as the dominant global currency."
"After Trump vowed to impose tariffs on European countries that were resisting his claims to Greenland, the stock market plunged. The dollar fell, too. But shortly after arriving in Davos, he abruptly dropped his tariff threat and declared, on seemingly little basis, to have reached a "long-term deal" over the Arctic territory, and stocks quickly recovered most of their losses."
President Trump's threats over Greenland and tariff posturing have alarmed European allies and shaken investor confidence. European leaders perceive a rupture in trust and growing doubts about the United States as a reliable partner on military and economic security. Some middle powers are considering closer cooperation for self-defense. Financial markets reacted sharply: stocks fell and the dollar weakened after the tariff threats, then partly recovered when the President abruptly rescinded the threats and claimed a "long-term deal." The market volatility has raised renewed questions about U.S. economic leadership and the dollar's global dominance.
Read at The New Yorker
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