As Europe considers how best to respond to U.S. President Donald Trump¡¯s latest threats over Greenland¡¯s sovereignty, there¡¯s one extreme potential counter measure that¡¯s fueling debate among investors.
European countries hold trillions of dollars of U.S. bonds and stocks, some of which sit with public sector funds. That¡¯s spurring speculation they could sell such assets in response to Trump¡¯s renewed tariff war, potentially driving borrowing costs up and equities down given U.S. reliance on foreign capital.
But that¡¯s easier said than done. The bulk of these assets are held by private funds outside the control of governments, and in any case such a move would likely hurt European investors too. Most strategists therefore believe there¡¯s a low chance policymakers would ultimately go so far, given their broad reluctance to stand up to Trump since his return to power a year ago.
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