In a statement delivered during a Thursday interview with Fox Business at the World Economic Forum in Davos, President Donald Trump issued a firm warning regarding potential financial actions by European countries in retaliation to his tariff measures. Trump indicated that if European nations decide to sell off their U.S. assets, the United States would respond with substantial counteractions, emphasizing, "We have all the cards."
This declaration comes as Denmark's AkademikerPension, a pension fund managing roughly $25 billion earmarked for educators and academics, announced plans to divest entirely from its U.S. Treasury holdings by January's end. The fund's chief investment officer, Anders Schelde, attributed this decision to concerns over the long-term sustainability of U.S. government finances, describing the U.S. as "basically not a good credit".
Holding about $100 million in U.S. Treasury notes, AkademikerPension's move reflects growing doubts regarding credit risks associated with U.S. fiscal policy amidst political tensions. Similarly, Greenland's SISA Pension is reportedly evaluating its stance on continued investments in U.S. equities.
The uproar intensified after President Trump’s previously proposed tariff increases on imports from eight European countries aimed at gaining leverage over Greenland, which raised speculation about Europe potentially unloading trillions in U.S. bonds and stocks as a retaliatory response. Nonetheless, executing such widespread selloffs could be complex. Much of these assets reside in private investment funds outside direct governmental control, although large institutional holders like Norway’s sovereign wealth fund possess the capacity to influence U.S. capital markets through significant asset reallocations.
Despite these developments, U.S. Treasury Secretary Scott Bessent expressed minimal concern about the plans of Danish pension funds, indicating a confidence in the resilience of U.S. Treasury markets. This evolving situation encapsulates rising economic uncertainties linked to international trade disputes and fiscal policies, with ramifications extending to global bond markets and equity investors.