By Hamza Shaban

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The tariff battles of 2025 are back. And it’s all about Greenland.

Wall Street began the week with a thrashing. Stocks posted heavy losses and a global bond sell-off, sparked in part over a renewed US-EU tariff war, forced bond yields to rise.

The geopolitical fight over the Arctic territory highlighted the sensitivity of the bond market and how the threat of new instability carries wide-ranging implications for the economy.

Treasury yields rose to their highest levels in four months as some investors bought into the "sell America" trade, prompted by President Trump's latest round of saber-rattling. A sell-off in Japanese bonds added to the pressure.

And in another sign of investors second-guessing the administration's foreign policy choices, the dollar (DX-Y.NYB) fell to a two-week low as the "debasement" trade boomed.

Bonds are in focus. But how much they need to move — or talk — to get the administration's attention remains to be seen.

Over the weekend, President Trump warned that he’d enact new tariffs of 10% on eight European countries unless they secure a deal to hand Greenland over to the US. It didn’t end there. The duty, he warned, would climb to 25% in June, putting the squeeze on European allies.

EU leaders responded in kind, condemning Trump’s threats and gesturing towards retaliatory tariffs of their own.

While not quite as dramatic as the sell-offs during the "Liberation Day" panic of last spring, the escalation of tensions between the US and EU nations has rekindled worries that were thought to be settled.

In both cases, the bond market served as an expression of fears over economic and trade policy. And if 2025 is any prelude to this year, it's also a market that may have a better chance of being heard than its stock-based equivalent — a reason to keep an eye on yields.

US bonds are considered a safe haven for investors, a place to ride out global shocks and shield money from the whims of the day. But similar to "Liberation Day," the US government is the source behind the Greenland upheaval.

Instead of flocking to US assets, investors are trying to get out of them. The instability is coming from inside the house, and those jitters reflect the possibility of real economic harm.

“If the US carries out its threat and imposes an additional 25% tariff on European countries, and if there's like-for-like retaliation, it would lower US GDP by 1% relative to our baseline at peak impact,” said Oxford Economics analysts, including Ben May and senior economist Rory Fennessy, in a report earlier this week. “The peak hit to the Eurozone would be similar but more drawn out."

Greenland Minister for Foreign Affairs and Research Vivian Motzfeldt speaks to people who were waiting for her arrival at airport of Nuuk, Greenland, on Tuesday, Jan. 20, 2026. (AP Photo/Evgeniy Maloletka)

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.