Trump’s Arctic ambitions torch the most important U.S. asset

People protest against Trump's policy towards Greenland in front of the U.S. consulate in Nuuk, Greenland on Jan. 17, 2026. Photo by AP Photo/Evgeniy Maloletka

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We should be in no doubt now that Donald Trump is ripping up global markets. The only question is how far the rest of the world goes in using it against him.

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We really should have seen it coming. Before Trump retook the White House a year ago, one of his key financial lieutenants, Stephen Miran, wrote a detailed if baffling paper about a so-called Mar-a-Lago Accord — a recognition that for the U.S., the global hegemon, everything is “intertwined.” Trade, finance and defence are three legs of the same stool, and each can be used to reinforce the other in the interests of America First.

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Miran was later appointed to chair the president’s prestigious Council of Economic Advisers. He has since snagged a plum role in the United States Federal Reserve, where he has advocated for Trump’s preferred monetary policy: sharply lower interest rates. True, the administration, and Miran himself, have sought to downplay some of the 2024 paper’s key points, explaining it was just a thought exercise teasing out a collection of options for the new era of U.S. greatness.

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But just as Project 2025 has turned out to be a how-to guide for the Trump presidency, so the Mar-a-Lago Accord framework, or something at least very similar to it, has slipped into being. Coincidence, maybe, but if threatening tariffs on supposed allies as punishment for their failure to support Trump’s crackpot territorial expansion plans is not that, then what is it?

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As the paper says: “President Trump views other nations as taking advantage of America in both defense and trade simultaneously: the defense umbrella and our trade deficits are linked.”

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On Monday, the market reaction to Trump’s latest assault on the global order has been extremely telling. The rules of the road up to now have been pretty simple: geopolitical shocks push up the dollar and U.S. government bonds because they are the safest, most reliable, most easily tradeable bits of the global financial system. They are very useful shock absorbers when bad stuff happens, even when it is born in the U.S.

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That role has been creaking for a little while. But now, the wobble is plain for all to see. Bad stuff is very clearly happening with regards to Greenland. The dollar and Treasuries, however, are weakening. Not dramatically — although it is notable that benchmark 10-year U.S. government bond prices are now at their weakest since September — but clearly. German Bunds and U.K. gilts, meanwhile, are doing just fine.

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It’s not necessarily wise to extrapolate too far from a short-term market shakeout but this is a strong hint that investors are doing two things: disregarding the dollar and Treasuries as safe retreats, huddling instead in the warm embrace of gold, and treating a U.S.-born shock as a reason to sell U.S. assets. The latter may seem obvious. This is, after all, how emerging markets and smaller economies have always fared. It is a brave new world for the U.S., however, and one that will reinforce the urge among big investment firms to park a greater share of their resources in Europe, Asia and indeed anywhere else over time.

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This is a huge vulnerability for the U.S., and one that people around Trump are certainly aware of. It is no coincidence that he backtracked on his most aggressive trade policies last April when the bond market became, in his word, “yippy.” He needs a strong bond market to help fund his fiscal agenda, not a weak one that jacks up his borrowing costs.