A closely watched measure of market anxiety jumped above the 20 mark for the first time since November, as U.S. stock futures slid and investors weighed the fallout from Washington’s tariff threats linked to Greenland.
The CBOE Volatility Index, better known as the VIX, surged 29% to 20.46 by 04:47 ET (09:47 GMT), extending gains for a second straight session. Both the VIX and Wall Street futures traded on Monday, even as U.S. cash equity markets were closed for a public holiday.
In the past year, similar volatility spikes faded quickly after President Donald Trump softened several of his tougher trade stances. However, with U.S. equities having rebounded sharply through 2025 and pushed on to record highs this year, investors are now more alert to the potential scale of any renewed market disruption.
Tuesday’s rise in the VIX reflects growing unease over whether Trump will follow through on plans to impose 10% tariffs on a number of European countries unless the United States is granted control of Greenland, the semi-autonomous Danish territory.
“[M]arkets are getting hit very hard,” analysts at Vital Knowledge said in a note, adding that Trump’s rhetoric signals a renewed flare-up in a trade war which “many assumed had largely ended after the White House struck a series of trade deals last year.”
Trump has said he intends to discuss Greenland during a visit this week to the annual meeting of the World Economic Forum in Davos, Switzerland, although it remains unclear which officials he will meet.
In a social media post, the president said he had held “good” discussions with Mark Rutte, head of the North Atlantic Treaty Organization. Questions have since emerged over whether the long-standing alliance can weather the current tensions, particularly given speculation around possible U.S. military action involving a NATO-linked territory.
European leaders have characterised Trump’s latest tariff threat as a form of blackmail and are reportedly considering their own countermeasures. These could range from a €93 billion package of retaliatory tariffs on U.S. imports to the potential use of an anti-coercion instrument, according to media reports.
That latter option, in particular, could significantly restrict U.S. access to the European economy, which together represents the world’s third-largest.