Yes, you read that right: It wasn’t diplomacy, and it wasn’t backroom deals among bigwigs inside some posh chalet here at the World Economic Forum.

Instead, it was the bond market that solved the Greenland crisis, IMHO and in the opinion of my Wall Street sources, persuading the president to settle for a “framework” that merely puts a few more US military bases on the ice-covered island.

I know what you’re thinking: I’ve jumped the shark on this one, so caught up in my fixation on ­finance that I can’t see the broader geopolitical forces that made it impossible for our president to send in the Navy SEALs to seize all that strategically positioned tundra.

True, Trump upset the world when he said he sees Greenland as a piece of the US and aimed to make it happen by any means necessary.

While the island is inhospitable and barely inhabited, it’s also a territory of Denmark, a country that is a NATO member.

More From Charles Gasparino

That means we have a treaty — ratified by Congress — not to mess with it.

All of which just proves my point.

While The Donald was blowing smoke about sending in troops, he more seriously brandished his preferred weapon of coercion — massive tariffs — on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.

They would either hand him Greenland or face an additional 10% tariff rate on their goods, later ramping up to 25%.

Europe went nuts — but so did the US bond market, with yields spiking and prices falling.

Stocks sold off, too, but their declines can be traced to the more serious tanking of bonds, spurred by the prospect of inflation caused by tariffs.

Strong signal

When bond prices fall and interest rates rise, that’s a strong signal that bad things are coming for the economy.

Higher rates mean higher borrowing costs for consumers, who in turn cut back on consumption. It also means we need to pay more money to finance our massive budget deficit.

We’ve seen this movie before.

Remember those onerous “Liberation Day” tariffs?

Charlie Gasparino has his finger on the pulse of where business, politics and finance meet

Sign up to receive On The Money by Charlie Gasparino in your inbox every Thursday.

Thanks for signing up!

The reason they never destroyed the economy as many predicted can be traced to a massive sell-off in bonds.

Recall that the minute Liberation Day was announced, Treasury Secretary Scott Bessent faced all of the above.

The yield on the all-important 10-year Treasury bond skyrocketed, heading to 5% — a dangerous level that signals a steep recession even with Trump’s big plans for tax cuts and deregulation.

Traders, so-called bond vigilantes, kept selling until Bessent ­announced the whole exercise of “liberation” was on hold.

In fact, bond prices didn’t stop tumbling until Bessent began to cut trade deals with the world including our arch-nemesis China, taking tariffs to much lower levels.

The markets then resumed their upward trajectory, put in motion by the president’s deregulation and tax cutting.

We didn’t have quite the same scenario when Trump announced his Greenland tariff scheme, but it was starting to head in that direction. The 10-year note spiked to above 4.3% and stocks sold off, and hard.

Exit ramp

That is, until Trump on Wednesday announced here at Davos that he had a new deal, his Greenland “framework,” or exit ramp — where he appears to have gotten nothing really new since Denmark has been largely compliant about letting the US military set up shop on its turf.

Markets didn’t care — in fact, they celebrated.

Bonds recovered, as did stocks.

In other words, the vigilantes struck again.

Former President Bill Clinton famously summed up the power of the bond markets years ago, back in the early 1990s, when he was told by one of his economic advisers that he needed to raise taxes for deficit reduction or bonds would collapse and interest rates rise.

He was flirting with recession.

His exact words to Robert Rubin, as reported by journalist Bob Woodward (which I later confirmed with Rubin, then the National Economic Council chief) went like this: “You mean to tell me that the success of my program and my re-election hinges on the Federal Reserve and a bunch of f–king bond traders?”

Rubin said yeah.

Now, those f–king traders are even more important to Trump and Bessent.

The debt and deficits of the Clinton years were minuscule compared to what we have now: Annual budget shortfalls of close to $2 trillion.

Our debt is at $38 trillion, a whopping 125% of economic output.

And that is how a bunch of ­“f–king bond traders” — not a huddle of power players in Davos — solved the Greenland crisis.

The post Trump ditches plan to take over Greenland amid state of US bond market appeared first on Our Story Insight.

President-elect Donald J. Trump has threatened tariffs on many countries for many different reasons.

On Monday, he found a new purpose for his favorite economic tool. Mr. Trump said he would “tariff Denmark at a very high level” if it refused to allow Greenland — a North American island that is an autonomous territory within the Kingdom of Denmark — to become part of the United States.

“They should give it up, because we need it for national security,” Mr. Trump said of Greenland.

Denmark, which has a smaller population than New York City, is not a huge trading partner for the United States. The country — a U.S. ally and a NATO member — sent the United States more than $11 billion worth of goods in 2023, just a tiny slice of more than $3 trillion of imports. The United States, in turn, sends Denmark more than $5 billion in goods, including industrial machinery, computers, aircraft and scientific instruments.

But despite its small size, Denmark, which handles Greenland’s foreign and security affairs, is home to some products that are very well-loved in America, goods that could become more expensive if Mr. Trump follows through with heavy tariffs. According to the Observatory of Economic Complexity, a trade data platform, roughly half of Denmark’s recent exports to the United States are packaged medicines, insulin, vaccines and antibiotics.

That’s largely because the country is home to Novo Nordisk, the maker of Ozempic and Wegovy, the popular weight-loss drugs. The company is so important to the Danish economy — it has recently accounted for half of Denmark’s private sector job growth and all of the country’s economic growth — that some have branded Denmark a “pharmastate.”

Novo Nordisk is increasing its U.S. production to meet the soaring demand for its GLP-1 weight loss products. The company does not specify publicly how much of its products are exported, but it produces drugs in Denmark and the United States for the U.S. market.

A spokesperson for Novo Nordisk said in a statement that they were following the situation closely but would not comment on hypotheticals and speculation.

Gilberto Garcia, the chief economist at Datawheel and a member of the Observatory of Economic Complexity team, said that Denmark’s exports of immunological products, which includes drugs like Ozempic, have been “growing exponentially.”

Denmark is also the leading supplier to the United States of hearing aids, he said.

Beyond medicines, Denmark also sends the United States medical instruments, fish fillets, pig meat, coal tar oil, petroleum and baked goods, among other products, according to the OEC.

And notably, for many children (and adults) Denmark is home to Lego Group, the world’s largest toymaker.

It’s not clear how much Lego exports directly from Denmark to the United States — the company serves much of the U.S. market from a factory in Mexico, as well as a new carbon-neutral facility in Virginia. It also manufactures the toy bricks in factories in Hungary, the Czech Republic, China and Vietnam, as well as Denmark. Lego did not respond to requests for comment.

But Lego, like other multinational companies that have global supply chains shuffling raw materials and products around the world, could see its business disrupted by tariffs. Mr. Trump has threatened to put levies on products coming into the United States from Mexico, China and other countries globally, in addition to Denmark.

Mr. Trump’s threats to claim Greenland came in a rambling news conference in which the president-elect also suggested retaking the Panama Canal and making Canada an American state, all statements that riled foreign leaders.

Mr. Trump argued on Tuesday that U.S. ownership of Greenland was a national security issue, given the paths charted by Russian and Chinese ships.

“Greenland belongs to the people of Greenland,” Greenland’s prime minister, Múte Egede wrote on Facebook Tuesday. “Our future and fight for independence is our business.”

On Wednesday, a spokesman for the European Commission called Mr. Trump’s comments about seizing Greenland as “hypothetical.” When asked about tariff threats, the spokesman said that the European Commission had been preparing for all possible implications of a Trump presidency on trade in Europe.

Jacob Funk Kirkegaard, a senior fellow in Brussels at the Peterson Institute for International Economics, said that few politicians in Europe take what Mr. Trump says literally.

“This is an outrageous demand,” Mr. Kirkegaard said of Mr. Trump’s threats to take Greenland. “The only way you can logically think of it is that by making this outrageous demand, Trump is going to get some concessions he otherwise wouldn’t have gotten.”

Mr. Kirkegaard said that should Mr. Trump follow through with his threat to implement tariffs on Denmark, he could expect an E.U.-wide response. “This idea that he can pressure Denmark as a single member state of the E.U., to offer policy concession by threatening tariffs, is going to invite retaliation from all of the E.U.”

Mr. Trump put tariffs into effect on numerous countries and hundreds of billions of dollars of goods in his first term. But other tariff threats never materialized, and it’s not clear how many of his new threats he will follow through on.

On Tuesday, the president-elect also reiterated a threat to put “very serious tariffs” on Mexico and Canada, complained about the U.S. trade deficit with Canada and the European Union, and floated an idea to rename the Gulf of Mexico “the Gulf of America.”

The post How Trump’s Greenland Plan Could Hit Ozempic, Legos and Hearing Aids appeared first on Our Story Insight.