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The main reason Donald Trump excluded a military option of taking over Greenland was not the frightful national security scenario that would follow a rupture of NATO. As destabilizing as that would be, the main reason Trump reversed course on using the military to seize Greenland was money.
He slowly had to recognize that generations of transatlantic security integration have fostered profound economic and financial interdependence between the United States and Europe. I suspect economic advisors told the president that directing his generals to occupy Greenland would risk economic and financial meltdown in the U.S.
Trump’s senior economic advisers and the business leaders he consults may be loath to contradict him. But in this case, it seems, some of them wisely feared even more the wrath he would unleash if an economic disaster unfolded and they hadn’t warned him.
The forces that could ignite an economic disaster following a military assault on Greenland were in plain view. European investors are central to the strength and stability of our economy and financial markets. Public data issued by the Federal Reserve show that European governments and private investors currently own $10.4 trillion, or 15.3 percent, of U.S. stocks, $3.4 trillion, or 11.0 percent, of U.S. government securities, and $2.9 trillion, or 11.6 percent, of U.S. corporate bonds.
Globally, foreign investors, public and private, own nearly one-third of our economy today—31.3 percent of all U.S. stocks, 36.3 percent of U.S. government securities, and 20.1 percent of U.S. corporate bonds. Put the data together, Europe’s public and private investors now own 48 percent of all foreign-owned U.S. stocks, 57 percent of all foreign-owned corporate debt, and 32 percent of all foreign-owned U.S. Treasury and agency securities.
The Europeans know how to protect themselves. In 2023, eyeing China, the European Union (EU) gave itself a powerful economic weapon, the “Anti-Coercion Instrument” (ACI). It empowers the EU Council to suspend government purchases of public securities from countries trying to strong-arm the EU. Unlike other EU Council decisions, the use of the ICU cannot be vetoed by a single member, such as Hungary, whose leader, Viktor Orban, is close to Trump. French President Emmanuel Macron last week publicly suggested invoking the ICU if Trump stayed on course to use military force against Greenland.
It’s a safe bet that Trump’s advisors conveyed Macron’s threat to the president as he headed to Davos, including that EU governments, along with the United Kingdom and Canada, hold $1.5 trillion to $2 trillion in U.S. Treasury securities, with nearly one-third needing refinancing each year. Given that Trump’s 2026 budget deficit absorbs most new U.S. private savings, halting European purchases, including refinancings, would spike U.S. interest rates. Bond and stock investors would likely panic. The mere suggestion pushed up the rates on 10 and 30-year bonds.
In a U.S-European crisis, private European investors pose a threat as serious as any posed by European governments.
European banks, hedge funds, insurance companies, pension funds, private endowments, and hyper-wealthy families own eight times more U.S. stocks, 19 times more U.S. corporate bonds, and roughly as many U.S. Treasury securities as their governments. Given these holdings, if a critical mass of them began to sell U.S. assets, stock and bond markets could melt down, and major American companies could become insolvent.
We can even predict which U.S. companies and industries will suffer the most. Those corporations with the largest foreign stock ownership and foreign-held corporate bonds are central to the American economy. They include computer and electronics manufacturing, information and telecom services, broadcasting and publishing, chemicals, comprised mainly of pharmaceuticals and oil and natural gas processing. Financial institutions are the U.S. industry with the highest levels of foreign ownership and foreign-held debt, so a large and abrupt sell-off by private European investors could trigger a meltdown in the financial system rivalling the 2008-2009 crisis.
They wouldn’t be alone heading for the door. American hedge funds held $2.9 trillion in financial assets in 2024.At the first sign that European private investors are preparing to sell substantial American assets, U.S. hedge funds would move, followed quickly by U.S. investment and commercial banks that manage the multi-trillion-dollar assets of American insurance companies, pension plans, endowments, and hyper-wealthy U.S. families.
European investors have staked so much on the American economy because the U.S. has been stronger, stable, and more secure economically than other major countries. Returns on U.S. stocks have been higher, taxes on those returns have been lower, and inflation here has been generally lower. European institutions also hold U.S. assets because their rights have been ironclad, based on the American government standing behind its contracts and enforcing private ones.
That’s the rub: NATO is a bedrock contract between the U.S. and Europe, and Trump seizing Greenland shreds that agreement—and, with it, foreign confidence in their ownership of U.S. assets.
A military move on Greenland would make the U.S. an enemy, and European investors know that an enemy can seize foreign-owned assets or impose crippling taxes. As European investors weigh trading U.S. stocks, corporate bonds, and Treasury securities, they must weigh whether their ownership rights are secure.
Trump may not fully grasp the complex interdependence between our economy and Europe’s. We can only hope he now understands that using military force against a NATO ally would dissolve transatlantic security integration and shatter the economic integration that accompanies it.
