Investors betting on Trump to 'chicken out' after latest threats

U.S. President Donald Trump holds a cabinet meeting at the White House in Washington, D.C., U.S., April 30, 2025. REUTERS/Evelyn Hockstein

President Donald Trump recently turned heads around the world in a message to Norway's prime minister threatening to use the military to take Greenland for the United States. But investors are hedging their bets on the U.S. president blinking before actually acting on his threat.

In a Monday article, the Wall Street Journal's James Mackintosh reported that financial markets have yet to react sharply in spite of Trump's saber-rattling toward longtime U.S. allies. As of Monday afternoon, gold had risen just two percent (the price of gold typically sparks in response to international crises) and S&P 500 futures fell by just one percent, which is a similar decrease to European stocks.

Mackintosh theorized that the investor community has become "inured" to Trump, comparing the market panic that came about in the wake of his "Liberation Day" tariffs last April to the muted reaction in markets after Trump threatened Denmark over Greenland. He also pointed out that the "TACO" adage – which stands for "Trump Always Chickens Out" — appears to be driving investor behavior in early 2026.

"While some of his policies have stuck, how likely is he to impose the new tariffs threatened for next month? No one other than him can know, but it is very hard to tell when he’s serious and when he’ll back down," Mackintosh wrote.

Investors may also be counting on the Supreme Court of the United States (SCOTUS) to strike down a bulk of Trump's tariffs on the United States' core trading partners around the world. Mackintosh wrote that Trump's threat to impose tariffs on European allies over Greenland may be seen by many investors as a "blip" on their radar. He also pointed out that some investors may be taking a more cynical view, seeing Denmark's buildup of troops in Greenland as a boon for defense-related stocks. He added, however, that taking such an approach comes with a risk, noting that the assassination of a political leader that kick-started World War I was also dismissed by investors at the time.

"Something like this happened when Austrian Archduke Franz Ferdinand was assassinated in 1914," Mackintosh wrote. "Investors ignored it for almost a month, then when it became clear that war was coming they panicked — prompting a financial meltdown in London, then the mainstay of global finance."

Trump is currently in Davos, Switzerland for an annual gathering of world leaders, corporate executives and leaders of prominent NGOs. His trip to Davos was preceded by an exchange with Norwegian Prime Minister Jonas Gahr Store in which the U.S. president said that not winning the Nobel Peace Prize meant that he "no longer feel[s] an obligation to think purely of Peace."

"I have done more for NATO than any other person since its founding, and now, NATO should do something for the United States," Trump wrote. "The World is not secure unless we have Complete and Total Control of Greenland."

Click here to read Mackintosh's full report in the Wall Street Journal (subscription required).

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