The U.S. stock market plunged on Tuesday after President Trump threatened to impose fresh tariffs on European trading partners over the weekend, one of the latest developments in his bid to acquire the island of Greenland.

The Dow Jones Industrial Average dropped 870 points, or 1.8%, to close at 48,489, while the S&P 500 fell 143 points, or 2.1%, to close at 6,797.

Major tech stocks took a hit, with the Nasdaq Composite sinking 2.4%. Nvidia and Amazon shares dropped 3.6% and 3.7%, respectively.

The rocky day on Wall Street came after President Trump said on Saturday on Truth Social that he would impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland beginning in February. Trump said the tariffs would rise to 25% on June 1 and apply to imports from NATO countries until a deal is reached for the purchase of Greenland.

European markets and markets in Asia also fell on Tuesday.

The European Union accounts for a large share of U.S. imports, with annual shipments from its member nations exceeding those from Mexico and China combined.

Mr. Trump linked his aggressive stance on Greenland to last year's decision not to award him the Nobel Peace Prize, telling Norway's prime minister that he no longer felt "an obligation to think purely of Peace," in a text message released Monday.

Mr. Trump's message to Jonas Gahr Støre appeared to ratchet up a standoff between Washington and its closest allies over his threats to take over Greenland, a self-governing territory of NATO member Denmark.

Mr. Trump's threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union's anti-coercion instrument.

Davos meeting
U.S. Treasury Secretary Scott Bessent, speaking on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland, asserted that America's relations with Europe remain strong. He urged trading partners to "take a deep breath" and let tensions driven by the tariff threats over Greenland "play out."

"Geopolitical events will remain in focus today, particularly any talks that may take place in Davos," said Michael Brown, a senior research strategist at Pepperstone, referring to the World Economic Forum.

Wedbush Securities analyst Dan Ives said the new tariff threat "is clearly an overhang on the conference," but that it would likely simmer over time.

"Our view is just like over the last year the bark will be worse than the bite on this issue and tariff threats as negotiations take place and tensions ultimately calm down between Trump and EU leaders," Ives wrote in a note to clients.

This week will bring more U.S. corporate earnings and the latest inflation measurement that's preferred by the Federal Reserve for making policy decisions.

The U.S. Federal Reserve's next policy meeting is in two weeks. Interest rate traders currently place a 95% likelihood that the benchmark interest rate unchanged, according to CME Group's FedWatch tool. The Bank of Japan has a monetary policy board meeting ending later this week.

Silver and gold both rose to records again as investors sought safety amid heightened geopolitical tensions. Gold prices surged 3.7% and silver prices soared 6.9%.

The price of U.S. crude oil rose 1.5% to $60.34 per barrel. The price of Brent crude, the international standard, rose 1.3% to $64.76.

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