New currency war? Trump warns the EU about a sell-off of American assets

The escalating tensions between the US and the EU suddenly intensified as President Trump issued a direct warning: if European countries start dumping US assets, Washington will respond swiftly with strong economic measures. This is not just a simple warning but a sign of a potential currency war that could erupt on a global scale, directly impacting financial markets and investors.

Context of Tensions: Why Currency War Has Become a Real Threat

According to an announcement on 01/22/2026, President Trump clearly stated that if the EU and allied countries sell off US government bonds or long-term assets, they will face severe economic consequences from Washington. This statement is not an emotional reaction but reflects deep concern over the US dollar’s position in the global market.

Currency war stems from fears that major economies will restructure their asset holdings, leading to a weakening of regional currencies and affecting the stability of the international financial system. In this context, maintaining confidence in US bonds and assets becomes critically important for the US government.

US Bonds Sold Off: Chain Reaction Leading to Financial Crisis Risks

If a large-scale sell-off occurs, the market will begin a series of interconnected reactions. First, government bond yields will spike as increased supply meets reduced demand, raising borrowing costs for the US government. Second, this instability could spill over into stock markets, real estate, and other risk assets on Wall Street.

This sell-off could also trigger a wave of fear among international investors, leading to a bubble effect where other investors rush to exit their positions. All these factors combined could result in a financial crisis lasting for months.

Three Retaliation Scenarios: From Tariffs to Asset Seizures

President Trump mentioned “large-scale retaliation” but did not specify what form it would take. There are three possible scenarios:

Scenario 1: Punitive Tariffs – Washington could impose high tariffs on EU goods, similar to previous trade measures. This would significantly impact the European economy, especially export companies.

Scenario 2: Financial Blockade – The US could refuse to approve large financial transactions with EU banks or restrict access to the international payment system.

Scenario 3: Unpublicized Measures – Washington might implement other political or diplomatic sanctions to emphasize its discontent.

What Investors Should Do When the Currency War Begins

In this tense situation, investors need to exercise extreme caution. Traditional assets like gold (XAU) and silver (XAG) have historically been considered “safe havens” during currency wars and could serve as reasonable risk hedges. At the same time, investors should rebalance their portfolios to reduce concentration risk in a single asset class or geographic region.

Emerging markets and other currencies may experience high volatility during this period, so reducing exposure or increasing defensive positions is necessary.

This article is for informational purposes only and does not constitute investment advice. Investors are advised to carefully consider and seek professional guidance before making decisions.