Five hours in Davos: Trump backs down on Greenland

President Donald Trump kicked off Wednesday demanding nothing short of full U.S. ownership of Greenland. Five hours later, he backed down from his all-or-nothing gambit that sent political and financial tremors from Wall Street to European capitals and beyond.

By the afternoon, Trump announced he reached a "framework" agreement satisfying his demands on Greenland, the latest in his effort to wrest control of the Arctic territory from Denmark, long responsible for managing its foreign affairs.

"Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," Trump said in a social media post. "Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."

What was actually agreed to wasn't immediately clear. The president steered clear from providing firm details in a CNBC interview. "We have a concept of a deal. I think it’s going to be a very good deal for the United States... we’re going to work together on something having to do with the Arctic as a whole, but also Greenland," he said.

He only added the agreement would last "forever."

White House spokesperson Anna Kelly told Quartz in an emailed statement that "if this deal goes through, and President Trump is very hopeful it will, the United States will be achieving all of its strategic goals with respect to Greenland, at very little cost, forever."

Part of the agreement, though, seems geared to quell Trump's fears of U.S. adversaries expanding their influence in Greenland. A NATO spokesperson said that talks on the Arctic island's future "will go forward aimed at ensuring that Russia and China never gain a foothold — economically or militarily — in Greenland."

Earlier in the day, Trump kept up his crusade for Greenland in a highly-anticipated speech at the World Economic Forum, saying he was seeking "immediate negotiations" to settle its status once and for all. The Danish government has previously stated ceding control isn't up for discussion.

Trump devoted much of his address in Davos, Switzerland to cobbling together a case for acquiring the territory after several days of lobbing tariff threats at Europe. In doing so, Trump blew up an interim trade accord with the European Union, provoking a brief sell-off rattling U.S. financial markets on Tuesday.

The European Parliament formally suspended the trade deal's ratification a day later. It was unclear whether European lawmakers would backtrack after the latest accord on Greenland.

“I love Europe and I want to see Europe go good, but it’s not heading in the right direction," Trump said in a speech stretching for just over an hour. He twice confused Greenland with Iceland.

On Greenland, he argued that the U.S. was mistaken in withdrawing U.S. soldiers from the territory following the end of World War II. Germany defeated and occupied Denmark in 1940, and the U.S. established a military presence on Greenland with the permission of the Danish government-in-exile shortly after.

Trump claimed that only the U.S. can secure the territory from Russia and China. He sought "immediate negotiations" on Greenland's future.

"We need Greenland for strategic national security and international security. This enormous, unsecured island is actually part of North America on the northern frontier of the Western hemisphere," Trump said. "That's our territory."

Prior to the speech, Trump and his top aides hadn't ruled out using military force to seize Greenland, raising fears that the U.S. could single-handedly tear apart the North American Treaty Organization (NATO) — the collective Western military alliance.

“We probably won’t get anything unless I decide to use excessive strength and force where we would be, frankly, unstoppable,” Trump said. “But I won’t do that... I don’t want to use force. I won’t use force. All the United States is asking for is a place called Greenland.”

The Danish Embassy in Washington D.C. did not respond to a request for comment.

At another point in the speech, Trump rebuked Canadian Prime Minister Mark Carney. On Tuesday, Carney candidly said in his Davos address that Canada and other "middle powers" were obligated to seek an alternative to U.S. hegemony, which has underpinned Western military security and their economies for decades.

"Canada lives because of the United States — remember that Mark, the next time you make your statements," Trump said.

Financial markets closed higher on Wednesday after the prior day's losses. The Dow Jones Industrial Average climbed 588 points, or 1.2%. The S&P 500 recovered 79 points, or 1.1%.

Trump on the Fed and domestic affairs

On the domestic front, the president hinted that he'd announce his new pick to replace Federal Reserve Jerome Powell "in the not-too-distant future."

"I think he'll do a very good job," Trump said in the speech. "They're all respected. They're all great. Everyone that I interviewed is great."

The four finalists to lead the central bank include Kevin Hassett, a White House economic aide; Kevin Warsh, a former Fed governor; Christopher Waller, a current Fed governor; and Rick Rieder, a Blackrock executive. Trump signaled he may keep Hassett in his current post, now that the Fed is dealing with a criminal probe from the Department of Justice threatening its longstanding independence.

Trump also touted a new measure to bar Wall Street firms from buying single-family homes. An executive order released Tuesday mandates Treasury Secretary Scott Bessent to define "large institutional investors" within 30 days and for the administration to "prioritize enforcement of antitrust laws."