Analysis of: World stock markets brace for turbulence after Trump’s latest tariff shock
The Guardian | January 18, 2026
The Trump administration's threat to impose escalating tariffs on eight European nations unless they support US acquisition of Greenland reveals the deepening contradictions within the Western capitalist alliance. Far from representing mere diplomatic eccentricity, this move exposes how inter-imperialist competition intensifies during periods of declining hegemony, with the dominant power increasingly willing to discipline its junior partners through economic coercion. The article's framing is revealing in what it emphasizes and omits. Business leaders, trade associations, and market analysts dominate the narrative, while the working classes of both continents—who will ultimately bear the costs through higher prices, job losses, and economic instability—remain invisible. The language of 'markets bracing,' 'risk-off sentiment,' and 'safe-haven demand' naturalizes a system where the anxieties of capital owners are treated as universal concerns. When the British Chambers of Commerce urges 'calm negotiation,' they speak not for workers but for export-oriented capital seeking stable conditions for accumulation. Most significantly, the dispute over Greenland—framed as geopolitical ambition—is fundamentally about control over strategic resources, including rare earth minerals, Arctic shipping routes, and military positioning. That territorial acquisition is being pursued through economic coercion rather than direct military intervention reflects both the constraints of the current moment and the continued primacy of economic instruments in maintaining imperial control. The potential 'unravelling of NATO alliances' mentioned reveals how capitalist nations' unity is always conditional, fracturing when the distribution of surplus becomes contested.
Class Dynamics
Actors: US state apparatus (Trump administration), European state officials (Starmer, von der Leyen), Financial capital (market analysts, brokerages like IG), Industrial capital (German auto industry, engineering associations), Commercial capital (British Chambers of Commerce, exporters), Working class (absent from narrative but materially affected)
Beneficiaries: Precious metals investors and speculators, US domestic producers competing with European imports, Defense contractors benefiting from geopolitical instability, Financial speculators positioned for volatility
Harmed Parties: European export-dependent workers facing potential layoffs, American consumers facing higher prices, European industrial workers in auto and engineering sectors, Small businesses lacking capacity to absorb tariff costs
The article reveals a hierarchy within the capitalist class itself: US state power disciplines European capital, while European business associations call on their states to respond. Financial capital (market analysts) frames the narrative, industrial capital scrambles to adapt, and workers remain entirely voiceless. The power asymmetry between US and European capital is stark—European business groups must petition their governments to 'flex muscles,' revealing their subordinate position within the transatlantic relationship.
Material Conditions
Economic Factors: US trade deficit with European nations, Declining US industrial competitiveness requiring protectionist measures, European dependence on US export markets, Strategic resource competition in the Arctic (rare earths, shipping routes), Global capital flight to 'safe haven' assets during instability
The tariff threat exposes how international production chains create vulnerabilities for export-dependent economies. German auto and engineering sectors, deeply integrated into global supply chains, face the prospect of either absorbing costs (reducing profits and potentially wages) or passing them to consumers. The article notes companies have 'little room to soak up any more'—revealing how competitive pressures under capitalism leave margins razor-thin, with workers typically bearing the ultimate adjustment costs through wage suppression or job losses.
Resources at Stake: Greenland's rare earth mineral deposits, Arctic shipping route control, Military-strategic positioning against Russia and China, European manufacturing export revenues, Gold and silver as crisis hedges (trading near record highs)
Historical Context
Precedents: 19th-century imperial scrambles for territory, Inter-war protectionism and competitive devaluations (1930s), US post-WWII construction of subordinate alliance structures, Nixon's abandonment of Bretton Woods (1971), Trump's first-term tariff wars with China and Europe
This episode fits the pattern of declining hegemonic powers resorting to increasingly coercive measures to maintain dominance. The US, facing relative decline against rising powers and internal economic contradictions, turns economic weapons against allies rather than just rivals. This mirrors Britain's turn toward imperial preference in the 1930s as its global position weakened. The demand for territorial acquisition (Greenland) echoes earlier phases of capitalist expansion where direct colonial control was necessary to secure resources and strategic positioning—a partial regression from the post-WWII model of informal empire through financial and institutional mechanisms.
Contradictions
Primary: The contradiction between maintaining Western capitalist unity against rivals (China, Russia) and the competitive logic driving individual capitalist states to pursue their own interests at allies' expense. US attempts to strengthen its position materially undermine the alliance structure that provides geopolitical leverage.
Secondary: European capital needs US market access but also needs independence from US coercion, Free trade ideology clashes with protectionist policy reality, NATO's security framework contradicts economic nationalism of its leading member, Business demand for 'calm negotiation' contradicts the systemic pressures driving conflict
These contradictions are unlikely to find stable resolution within the current framework. Possible developments include: European moves toward greater economic independence (accelerating trade with China/Global South), temporary deals that paper over conflicts while underlying tensions persist, or escalation into broader trade war. The VDMA's call to use the EU's 'anti-coercion instrument' signals European capital may push for confrontation rather than accommodation, potentially accelerating the fracturing of Western alliance structures.
Global Interconnections
This crisis connects to several global dynamics: the broader restructuring of global capitalism as US hegemony declines; the new scramble for Arctic resources as climate change opens previously inaccessible regions; and the tension between globalized production and the nation-state system. The flight to gold ($4,625/oz) reflects deep uncertainty about the stability of the dollar-based financial system and suggests capitalist actors themselves doubt the durability of current arrangements. The Greenland dimension reveals how climate change is creating new frontiers for capitalist expansion and inter-imperialist competition. As Arctic ice melts, previously inaccessible resources and shipping routes become contestable, intensifying rivalries. That the US pursues this through economic coercion of allies rather than direct confrontation with Russia or China indicates the peculiar configuration of the current moment—a declining hegemon unable to project power against rising rivals but still capable of disciplining subordinate partners.
Conclusion
This episode should dispel illusions about the 'rules-based international order' as anything other than a framework for managing relations among capitalist powers under US dominance—rules that apply when convenient and are discarded when not. For working-class observers, the key lesson is that neither American protectionism nor European 'free trade' advocacy serves their interests; both represent different strategies for capital accumulation. The coming period will likely see intensified economic nationalism, with workers on all sides bearing the costs of capitalist competition. The fracturing of Western unity, while creating dangers, also potentially opens space for alternative formations—though only if working-class movements can organize independently of their 'own' national bourgeoisies, who will inevitably seek to channel discontent into nationalist directions that preserve capitalist relations.
Editorial Note: This analysis applies a dialectical materialist framework to news events. It represents one interpretive perspective and should not be considered objective reporting.
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