Europe’s potential deployment of capital market measures against the United States over the Greenland dispute would trigger financial disruption far exceeding traditional tariff impacts, according to Nigel Green, chief executive officer (CEO) of deVere Group, a global financial advisory firm.
Green’s warning emerges as the European Union is reportedly weighing deployment of its Anti-Coercion Instrument while preparing up to €93 billion in retaliatory tariffs against the US. The measures would follow Trump’s announcement of a 10% tariff starting on Feb. 1 on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland that will rise to 25% on June 1 unless Europe agreed to a deal involving Greenland.
Trump’s appearance at the World Economic Forum in Davos is likely to place the dispute at the centre of a summit normally designed to project stability. Instead, trade, geopolitics, and financial leverage is expected to dominate discussions at the Swiss gathering.
According to Green, deploying the Anti Coercion Instrument would transform the conflict beyond a standard trade dispute. He argues that capital markets themselves would become weaponized tools of geopolitical pressure, with tariffs hitting exporters while capital pressure would affect confidence, currencies, bonds, and equities simultaneously.
European countries collectively own around $8 trillion of US bonds and equities, according to Deutsche Bank analyst George Saravelos, making them America’s largest external financiers. NATO allies alone hold close to $3 trillion in US Treasuries, providing Europe with influence that traditional tariffs could never match.
Green emphasizes that the United States relies heavily on foreign capital to fund its deficits, creating a critical pressure point. However, he warns that this leverage comes with severe limitations, noting that capital markets do not obey political instruction and once repricing begins, it cannot stay contained.
Europe would also face a structural challenge in finding credible alternative destinations for capital on the scale required to materially reduce US exposure. Asian markets would lack sufficient depth, and global portfolios could be expected to remain anchored to US assets because of liquidity, legal certainty, and scale.
The Anti-Coercion Instrument was established in 2023 but has never been activated. French President Emmanuel Macron has raised the prospect of hitting back with the EU’s trade weapon, with the leader of the liberal Renew group in the European Parliament also calling for its deployment.
The instrument is intended to deter economic coercion against any of the European Union’s 27 member states. The armoury allows the EU to take measures such as import and export restrictions on goods and services in its single market of 450 million people. Brussels could also limit American companies’ access to public procurement contracts across Europe.
Green warns that moving against US capital markets would push up US yields and pressure the dollar, while also tightening global liquidity. The effects would rebound into European banks, pension funds, and corporates that rely on dollar funding.
The procedural complexity of the Anti Coercion Instrument would also amplify uncertainty. Its timelines would risk prolonging instability rather than delivering swift resolution, potentially stretching political risk over weeks or months. Markets generally dislike nothing more than unresolved pressure, according to Green.
Trump’s current posturing suggests little appetite for retreat. The deVere CEO concludes that while risks of deploying capital based measures would be significant for Europe, the more important signal lies in the fact that such options are now openly discussed. The moment capital measures are discussed publicly, markets could begin pricing the possibility, which alone would tighten conditions and raise uncertainty.
The Greenland dispute therefore marks a shift in how far Europe might be prepared to go, with the deVere CEO noting that this would be Europe signalling that conventional trade retaliation may no longer be sufficient. The most important development right now, Green argues, is not what Europe does immediately but what it’s now prepared to consider.
