U.S. President Donald Trump has abruptly stepped back from threats to impose tariffs or use force to pressure Denmark over Greenland, signalling a sharp shift after weeks of rhetoric that unsettled NATO allies and rattled global markets. Speaking during a brief visit to the World Economic Forum in Davos, Trump said a deal was now taking shape that would avoid a major transatlantic rupture and ease fears of a new trade war.

Trump said the emerging agreement would focus on long-term security cooperation in the Arctic, including missile defence and access to critical minerals, while countering Russian and Chinese influence in the region. After meeting NATO Secretary General Mark Rutte, he said the U.S. would not proceed with tariffs that had been set to take effect on February 1, adding that discussions were ongoing and would involve senior officials including Vice President JD Vance and Secretary of State Marco Rubio.

Denmark welcomed the de-escalation but stressed that any outcome must respect Danish sovereignty and the right of the Greenlandic people to self-determination. Foreign Minister Lars Løkke Rasmussen said the matter should be handled through quiet diplomacy rather than public statements. Trump also ruled out the use of force, a move that helped calm markets and contributed to a rally in U.S. stocks after weeks of uncertainty driven by his earlier threats.