What to make of Trump’s Greenland push?

US President Donald Trump’s comments on Greenland date back years. But it was in early January, when he told the American magazine The Atlantic that the US “does need Greenland, absolutely,” that his designs on the Danish autonomous territory became front-page news.

Even though Trump recently tied his clamour for Greenland to his alleged Nobel Peace Prize snub, one needs to look back at the trade spat between the US and China from a few months ago to better understand the timing.

Truce out of convenience

Back in October 2025, Trump threatened to raise tariffs on China by 100%. China responded assertively by playing the “rare earths card”, leading the two nations to enter a one-year trade truce – seemingly out of convenience – which included a reduction in tariffs and a suspension of rare earth export controls. It’s no secret that both sides hold significant leverage over each other – the US leads in technology, while China accounts for 70% of the global rare earths production, an essential component in the manufacturing of nearly every aspect of modern life.

Both sides “bought time” to lessen each other’s leverage – China announced its 15^th Five-year Plan, highlighting the imperativeness of technological self-sufficiency as it strives to catch up to the US, while the US became laser-focused on obtaining more resources. Given this context, Trump’s eagerness to secure heavy crude access from Venezuela and tap the rare minerals resources available in Greenland makes a lot of sense.

“Impossible trinity” not so impossible anymore

So why did it take until 2026 for his ambitions to come to the fore? Well, we have highlighted Trump’s “impossible trinity” before, i.e., 1) his wish to fight a global trade war, 2) his desire to support the US economy and 3) his goal of not reigniting inflation. In Q4 2025, with the US economy slowing and inflation remaining relatively sticky, this “impossible trinity” forced Trump to “back off” from China.

Fast-forward to 2026, the latest US non-farm payroll numbers from December 2025 show weakness, but not at an alarming rate. However, there has been a more obvious downtrend in inflation, and it appears that we are past the peak tariff effect. Hence, what was previously an “impossible trinity” is not so “impossible” anymore. The current US economy looks increasingly capable of withstanding a potential reignition of inflation without derailing the Fed’s plans to cut interest rates. US growth is now in a “weak Goldilocks” state, which gave Trump a window of opportunity to push his geopolitical agenda and weaponise tariffs against the European countries that back Greenland’s sovereignty.

The presidential election playbook – appealing to mass voters

Unsurprisingly, Trump has already started wooing the US electorate ahead of the November 2026 US mid-term elections by focusing on the masses. For example, he delayed tariff hikes on some essential goods, including furniture, at the end of 2025 and introduced policies to make housing more affordable, such as the launch of his mortgage-backed securities (MBS) purchase programme, designed to lower mortgage rates.

Yes, retaliation by the EU can lead to more expensive European goods, but I would argue that European goods are generally more high-end or concentrated in luxury segments – items that the mass voters in the US are less likely to be consuming in large volumes. Remember, a key factor behind Trump’s second presidential election victory in 2024 was his strong support from the masses even as many leading figures and commentators remained sceptical – a playbook he is trying to replicate in 2026.

Going for gold

We believe gold continues to be an attractive investment in 2026. Following the US-led ouster of ex-Venezuelan President Maduro and amid the growing noise around Greenland, we expect central banks to step up their purchase of gold and continue to de-dollarise. Gold will benefit from lower real yields and the increasing demand for it as a hedge against geopolitical risks.

The simmering US-EU tensions are unlikely to lead to a return of US inflation. We still see three Fed rate cuts at 25bps each in 2026. Trump knows very well what is at stake in a mid-term election year – since World War II, there has been only a 55% probability of US equities delivering positive returns in a mid-term election year vs. 76% in other years. Moreover, the S&P500 registered an average return of 3.8% in mid-term election years, compared to a 10.8% average gain in other years. Most importantly, Trump’s Greenland comments came at a time when European countries have underinvested in their military capabilities, having enjoyed years of protection under the NATO framework and from the US. It will be interesting to see how the situation unfolds in the coming weeks.