Macro Mondays Europe, Trump & the Limits of Trade Escalation
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Jan 19, 2026 The discussion dives into Trump's tariff threats and the geopolitical implications surrounding Greenland. There’s a breakdown of how Japanese yields are affecting the market. The hosts explore the potential for a trade war escalation between the US and EU but note significant constraints on rapid retaliation. They outline possible EU responses and emphasize unity in defense matters. Plus, the conversation shifts to the transformative impact of AI moving from hardware to software. It's a lively mix of market insights and futuristic tech debates!
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Tariffs Are Leverage, Not Full-Blown War
- The market sees Greenland and Trump tariff threats as negotiation leverage rather than imminent war.
- Andreas Steno Larsen thinks a tariff spat is worrying only if it escalates into prolonged tit-for-tat measures.
EU's Slow Process Dampens Trade Escalation
- The EU's decision-making speed and structures make rapid tit-for-tat escalation less likely than US–China trade wars.
- Andreas Steno Larsen expects rhetorical EU responses and dragging-out rather than immediate symmetric retaliation.
Watch For Digital Tax Retaliation
- Monitor for EU digital services taxes as the likeliest escalation beyond reciprocal tariffs.
- Avoid assuming extreme measures like ASML export bans or asset-blocking unless political pressure intensifies severely.