The US rejects the risk of Europe selling off assets in retaliation for Greenland

Speaking on the sidelines of the World Economic Forum (WEF) in Switzerland on January 20, Mr. Bessent called on European partners to “take a deep breath” and remain calm in the face of current trade tensions surrounding the Greenland issue. He even emphasized that the relationship between Europe and the US is in fact closer than ever.

“I told everyone. Sit down and calm down. I am confident that the leaders of the countries will not escalate. The current situation will be resolved in a way that everyone benefits. There is no need to think about the worst scenario,” he said.

The statement was made after President Donald Trump threatened to impose a 10% tax from February 1 on goods from eight European countries if Denmark does not cede Greenland to the US. Escalating tensions have made analysts worried that Europe may coordinate to sell off US financial assets, especially the amount of US public debt.

Of the total $30,000 billion in US government bonds, about $4,000 billion is held by European investors, the majority of which are investors in the UK, Belgium and France. European financial markets also control about $10,000 billion in assets in the US.

Expert Ipek Ozkardeskaya from Swissquote said that the prospect of Europe selling off these assets is no different from “pulling the carpet out from under the Americans’ feet”, causing long-term interest rates to skyrocket and debt management costs to become expensive.

However, Finance Minister Bessent affirmed that this scenario “goes against all logic” because the US government bond market has the best liquidity and quality in the world.

“The talk about the sell-off scenario is completely wrong. I think everyone should take a deep breath and stop listening to sensational stories in the media,” he said.

Contrary to Mr. Bessent’s optimism, the financial market is reacting negatively to tensions as observers note that the trend of selling off US assets is gradually appearing. Treasury yields are surging, the dollar is falling and Japanese investors are leading the global bond sell-off.

The European Union (EU) plans to hold an emergency summit on January 22 to discuss measures to deal with the latest trade sanctions from Washington, including a plan to activate the Anti-Coercion Mechanism (ACI).