Wall Street's volatility gauge spiked 29% to 20.46, its highest since November, as U.S. stock futures fell on holiday-thinned trading. The CBOE Volatility Index, or VIX, jumped amid escalating tensions over President Trump's tariff threats targeting European nations unless the U.S. gains ownership of Greenland, a semi-autonomous Danish territory.

Investors are bracing for a potential trade war resurgence after assuming such conflicts had largely subsided. European leaders have labeled the threats as blackmail and are reportedly preparing a 93-billion euro retaliatory tariff package. This could severely impact the European economy, the world's third largest, and further strain the NATO alliance.

Trump is set to discuss Greenland at the Davos World Economic Forum this week. Markets, which hit record highs in 2025, now face uncertainty over the magnitude of potential ructions. The key question for investors is whether this represents a temporary flare-up or a lasting shift in global trade dynamics.