VIEW Investor reaction as U.S. President Trump withdraws tariff threat, says Greenland deal framework reached

• U.S. stocks surged with the S&P 500 gaining 1.4% while the 10-year Treasury yield fell 4.2 basis points to 4.255%
• Market analysts characterized the situation as 'escalate to de-escalate,' noting the tariff threat had shaken investor complacency and raised tail risks
• Investors broadly viewed the specific deal details as less important than the removal of immediate tariff and military action risks

Summary: Trump Withdraws Tariff Threat as Greenland Deal Framework Emerges

Key Development:

President Donald Trump announced on January 21, 2026, that he is withdrawing planned tariffs scheduled for February 1st following a meeting with NATO Secretary General Mark Rutte in Davos. Trump stated a framework agreement has been reached regarding Greenland's future, though specific details were not disclosed.

Market Reaction:

• U.S. equities: S&P 500 surged 1.4%, extending gains sharply
• Treasury yields: 10-year yield fell 4.2 basis points to 4.255%
• U.S. Dollar Index: Rose 0.1% to 98.79

Analyst Commentary:

Market experts characterized the move as a "relief rally" and an "escalate to de-escalate" situation. Wedbush Securities noted that investors had been concerned about both tariff implementation and potential military action, which Trump also ruled out during his Davos appearance.

Analysts from Corpay highlighted that while the development removes "tail risks," the episode served as a reminder of ongoing market volatility risks. Pepperstone's strategist indicated investors would likely refocus on the "solid equity bull case" with geopolitical risks diminished.

Market Implications:

Strategists suggested specific deal details are less important than the tariff threat removal itself. The development reduced near-term uncertainty and allowed markets to return focus to positive U.S. macro fundamentals. However, analysts noted the dollar remains below week-opening levels despite the recovery.

The announcement follows days of escalating tensions over Greenland that had created investor anxiety and tested early-year market complacency.