European defence stocks retreated on Thursday after US President Donald Trump retreated from antagonistic trade war talk. He said Washington would not move ahead with planned tariffs on European countries. This was due to what he described as progress toward a prospective agreement linked to Greenland.
Shares in Germany’s Rheinmetall (RHM), Italy’s Leonardo (LDO) and France’s Thales (HO) chalked up declines of 2% to 3%. Sweden’s Saab (SAAB-B) also fell, while the UK’s BAE Systems (BA.) nudged more modestly lower to £20.48.
Productive NATO talks
Trump said the decision followed discussions with NATO Secretary-General Mark Rutte, which he characterised as ‘very productive.’ He added that further talks were under way. These talks could lead to an outcome that, ‘if consummated’, would be ‘a great one’ for both the US and NATO members.
‘Based on this understanding, I will not be imposing the tariffs that were scheduled to go into effect on 1 February’, Trump wrote on Truth Social. He added that ‘“additional discussions are being held concerning the Golden Dome as it pertains to Greenland’. This is a reference to his proposed missile defence initiative.
In an interview with CNBC later Wednesday, Trump confirmed that the tariff threat had been withdrawn. ‘We took that off the table’, he said, referring to duties that had been aimed at European countries opposed to a US takeover of Greenland. He said this was the case ‘because we had pretty much the concept of a deal.’
TACO trade alive and well
Investors may see this reverse as more proof that the TACO trade (Trump always chickens out) is alive and well.
The comments marked another step back from earlier tariff threats and a softer tone on Greenland. They followed remarks made just hours earlier at the World Economic Forum. There, Trump said he would not use force to acquire the territory from Denmark. However, he continued to urge European leaders to support the proposal.
Europe, Trump said, faced a clear choice: ‘You can say yes and we will be very appreciative, or you can say no and we will remember.’
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