Europe eyes ‘capital weapon’

Europe’s consideration of using capital markets as retaliation against President Trump over Greenland would trigger financial disruption far exceeding the impact of tariffs, warns the CEO of global financial advisory giant deVere Group.

 Nigel Green’s warning comes as the European Union is reportedly weighing deployment of its Anti-Coercion Instrument while preparing up to €93 billion in retaliatory tariffs against the US.

 The measures would follow Trump’s warning that tariffs could rise to 25% unless Europe agreed to a deal involving Greenland.

 Trump’s appearance at the World Economic Forum in Davos tomorrow is likely to place the dispute at the centre of a summit normally designed to project stability. Instead, trade, geopolitics, and financial leverage are expected to dominate discussions.

Overnight, Trump posted on Truth Social an AI-generated image of himself alongside Vice President JD Vance and Secretary of State Marco Rubio in the Oval Office, with Greenland, Canada, and Venezuela shown beneath the Stars and Stripes.

 Nigel Green, CEO of deVere Group, says: “If the Europeans detonate the Anti-Coercion Instrument, this would no longer be a trade dispute.

 “Capital markets themselves would be weaponized to become a tool of geopolitical pressure.

 “Tariffs would hit exporters. Capital pressure would hit confidence, currencies, bonds, and equities all at once.”

 Europe would hold substantial theoretical leverage. European countries would collectively own around $8 trillion of US bonds and equities, making them America’s largest external financiers.

NATO allies alone would hold close to $3 trillion in US Treasuries.

“This exposure would give Europe influence that tariffs could never match,” notes the deVere chief executive.

 “The US relies on foreign capital to fund its deficits. This reliance would be the pressure point.”

 However, he warns that leverage would come with severe limitations.

 “Capital markets do not obey political instruction. They reprice, and once that process starts, it would not stay contained.”

 Europe would also face a structural problem. There would likely be no credible alternative destination for capital on the scale required to materially reduce US exposure. Asian markets would lack sufficient depth. Global portfolios could be expected to remain anchored to US assets because of liquidity, legal certainty, and scale.

 “Europe wouldn’t be choosing between the US and a clean substitute,” says Nigel Green.

He continues: “A move against US capital markets would push up US yields and would pressure the dollar.

 “It would also tighten global liquidity and rebound into European banks, pension funds, and corporates that rely on dollar funding.”

The Anti-Coercion Instrument itself would amplify uncertainty. It’s never been used. Its procedural timelines would risk prolonging instability rather than delivering resolution.

“This would stretch political risk over weeks or months,” Nigel Green says. “Markets dislike nothing more than unresolved pressure.”

Trump’s current posturing would suggest little appetite for retreat. His Davos attendance is likely to coincide with an increasingly forceful public stance rather than compromise.

 deVere concludes that while the risks of deploying capital-based measures would be significant for Europe, the more important signal lies in the fact that such options would now be openly discussed.

 “The Anti-Coercion Instrument would not be on the table lightly. It carries costs for Europe as well as the US.

 “The fact that it is being publicly reported would indicate that policymakers see the threat as serious and escalating.

 “The moment capital measures are discussed, markets could begin to price the possibility,” explains Nigel Green.

 “This alone would tighten conditions and raise uncertainty.”

The Greenland dispute would therefore mark a shift in how far Europe might be prepared to go.

The deVere CEO concludes: “This would be Europe signalling that conventional trade retaliation may no longer be sufficient. The risks of escalation would be real, but so would the message that the red lines have moved.”

 “The most important development right now is not what Europe does immediately, but what it’s now prepared to consider.”