Along the illustrious Davos Promenade, the US administration has taken over a 19th century church that's been reconsecrated for the week as a shrine to business and politics. On the eve of President Donald Trump's arrival, a banner hangs behind USA House spelling out, “House of God.”
It's as good a visual cue as any for the power plays ahead as Trump descends on the Swiss Alps for the first time since 2020 in the final year of what was, with the benefit of hindsight, a more restrained first term. That goes for European leaders as well as the gullible billionaires duped into buying fake tickets for access to Trump's entourage.
This is a very different Trump in his second iteration in power, with few if any constraints beyond his “own morality,” as he recently put it. Everything suggests he'll arrive in no mood to make concessions, only dictate how he plans to bring Greenland and the mineral riches buried beneath its rock and ice sheet under US control.
Never mind Ukraine, whose fate and that of its freezing population have been relegated to the diplomatic backburner. President Volodymyr Zelenskiy has now opted to skip the forum altogether.
With Trump the headline act on Wednesday, attendees of the World Economic Forum will have front-row seats on how the US president's very public brawl with a growing number of allies plays out amid talk of a revival of the “Sell America” trade.
De-risking is a popular buzzword of past forums, except this time it's swirling not in relation to China — but the US.
The question being asked is whether European countries holding trillions of dollars of US bonds and stocks will choose to “weaponize” those holdings by dumping them after Trump threatened additional tariffs on countries that resist his designs on Greenland, the world's largest island and sovereign Danish territory. One Danish pension fund offered an answer on Tuesday, opting to exit US Treasuries.
Trump, however, seems willing to call their bluff, citing national security.
“Well, I don't think they're gonna push back too much,” he told reporters Monday. “Look, we have to have it. They have to have this done. They can't protect it.”
That sentiment was echoed by Treasury Secretary Scott Bessent, part of a US advance party already in the Swiss ski resort. He dismissed as a “false narrative” the suggestion that Europe would forcefully retaliate by offloading Treasuries. “It's been 48 hours, sit back, relax,” he cautioned. “I am confident that the leaders will not escalate and that this will work out.”
History, after all, has shown that the European Union — hobbled in its geopolitical responses by the need to get a majority of its 27 members on side — tends to stall, engage and ultimately step back from the brink.
The Danes are sending no delegation to Davos, and while the business minister, who was meant to attend, has cited costs and scheduling conflicts as the reason for cancelling his attendance, there's clearly no upside to an ugly confrontation.
That would seem a fair conclusion to draw from the blowback Trump directed at leaders of fellow Group of Seven leaders Emmanuel Macron of France and the UK's Keir Starmer for having the temerity to object to his expansionist policy by sending a token number of soldiers to Greenland in a show of solidarity with Denmark.
They compounded their error in Trump's eyes by snubbing his “Board of Peace,” which some see as a putative rival to the United Nations — only charging countries $1 billion for a permanent seat at the table.
No country in Europe is in a position to rip up relations with the US, neither in terms of its security nor its economy. The bar that has been set, at least informally, is that it would take nothing short of an invasion of NATO member Denmark's Arctic territory to shift money in any great volume.
“The geopolitical winds have been blowing for a long time,” so “people got used to it,” Filippo Gori, JPMorgan Co-Head of Global Banking, told Bloomberg Television's Francine Lacqua in an interview at Davos. “Clearly an escalation could bring a slowdown in that sense.”
That's also how many market watchers see it in an era where elevated geopolitical volatility has been normalized. Even the surprise whisking away of Venezuelan autocrat Nicolas Maduro by US special forces was seen as little more of a blip by investors writ large.
State Street Chief Executive Officer Ron O'Hanley says there are discussions around the “Sell America” trade, but it is “not yet showing up in the numbers.”
‘Never Seen Before'
“Although, certainly we're in territory as it relates to Greenland that we've never really seen before,” he said. “The next few days are actually going to be quite important.”
Longer term, the players to watch out for are the pension funds, especially the Dutch and the Danish. As major holders of US debt, there is leverage there for the old continent to punch back.
According to people familiar with private deliberations, the Danish and Dutch pension funds are actively convening board meetings to decide whether to reduce or even zero out US exposure. It could be a mere contingency step, but the people say it's a real discussion.
Sure enough, Danish pension fund AkademikerPension said it is planning to exit US Treasuries by the end of the month amid concerns that Trump's policies have created credit risks too big to ignore, Chief Investment Officer Anders Schelde told Bloomberg on Tuesday. Greenland is part of that, but wider concerns about fiscal discipline also justify the retreat, he said.
What's clear is that investors are providing forward guidance while politicians with an eye on electorates prefer to deliberate before following through. The EU's much-vaunted but as-yet unused anti-coercion instrument, designed for just such drastic eventualities, is still waiting for deployment.
The EU and the US agreed to a trade deal only last July, European Commission President Ursula von der Leyen pointed out in her speech to the Davos crowd on Tuesday. “In politics as in business, a deal is a deal,” she said. “And when friends shake hands, it must mean something.”
What Europeans are beginning to grasp is that in Trump's world, business deals can be ripped up and redone. One immediate obstacle to a united European response is the Franco-German axis that underpins the euro currency bloc. Traditionally, Berlin is the economic heavyweight; Paris provides the political bravado.
On cue, Macron excoriated Trump's policies in a speech at Davos Tuesday, blasting “an endless accumulation of new tariffs that are fundamentally unacceptable.”
Earlier, it was Macron who said that the bloc, as one of the biggest US trading partners, can retort economically to accusations it is “weak” by using its nuclear option to respond to Trump's tariff threats by means of the anti-coercion instrument.
But rather than back him up, German Chancellor Friedrich Merz — with far more exports exposed to any trade war — is trying to rein him in.
Then there's the matter of how to talk to Trump, something that the Europeans clearly haven't mastered for all their “whisperer” contenders. In Davos, some note that Europe seems to still not realize that the only way to get Trump to stop is to hit back hard, as the Chinese did with rare earths.
Dutch Foreign Minister David van Weel said he hopes Trump is bluffing and he will back down. “I think that's the best outcome for everyone,” he said in an interview. Yet he was unwilling to back the EU's most potent response, saying he didn't hope that was necessary. “That's not the way friends and allies have to cooperate,” he said.
In trying to find a middle ground between strength and engagement, though, the risk is that Europe projects neither to a US administration that has little time for nuance.
If 2025 marked the rise of a new kind of strongman, this is the year that geopolitical fault lines are being redrawn to suit the spheres of influence of the most assertive. Trump kicked off 2026 with Maduro's removal while insisting on a takeover of Greenland and issuing threats to Mexico, Colombia and Cuba; his plans to hit Iran appear to be on hold rather than shelved.
China is doubtless drawing its own conclusions about land grabs and geopolitical muscle-flexing. Beijing dispatched a large delegation to work the room in Davos.
With crisis on repeat, “it's become the new normal,” Michelin Chief Executive Officer Florent Menegaux told reporters ahead of Davos.
He isn't at Davos, but plenty of other CEOs and may will be hovering near the Belvedere Hotel — a mere volley away from USA House — in the hopes of networking. Instead, yet another surprising image cropped up along the Promenade: A man carrying a wooden cross along the street.
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