TOKYO (AP) — U.S. futures fell sharply and European markets shed more than 1% on tensions driven by the Trump administration’s new tariff threats over Greenland.

France's CAC 40 slipped 1.2% to 8,014.42, while Germany's DAX lost 1.5% to 24,581.44. Britain's FTSE 100 shed 1.3% to 10,068.04.

The future for the S&P 500 sank 1.8% while that for the Dow Jones Industrial Average dropped 1.6%.

Trump said Saturday that he would charge a 10% import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland because of their opposition to American control of Greenland.

Trump's threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.

Meanwhile, U.S. Treasury Secretary Scott Bessent, speaking on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland, asserted that America’s relations with Europe remain strong. He urged trading partners to “take a deep breath” and let tensions driven by the tariff threats over Greenland “play out.”

In Asian trading, Tokyo’s benchmark Nikkei 225 lost 1.1% to 52,991.10 after Prime Minister Sanae Takaichi called a snap election for Feb. 8.

Yields on long-term Japanese government bonds surged after Takaichi indicated Monday she planned to dissolve parliament and hold an election, aiming to capitalize on her strong public opinion ratings. She also has proposed temporarily suspending the food tax.

Expectations that Takaichi will take a renewed electoral mandate to raise government spending have revived worries over Japan's national finances, pushing yields sharply higher, while prices of such investments have fallen as investors sold their holdings. The yield on the 40-year government bond surged to a record 4% on Tuesday, while yields on other long-term bonds also have been surging to decades-high levels.

Chinese markets also declined. Hong Kong’s Hang Seng gave up 0.3% to 26,487.51, while the Shanghai Composite ended nearly unchanged at 4,113.65.

In South Korea, the Kospi dropped 0.4% to 4,885.75, while Australia's S&P/ASX 200 lost 0.7% to 8,815.90.

Taiwan's Taiex gained 0.4% and the Sensex in India declined 0.8%.

“Geopolitical events will remain in focus today, particularly any talks that may take place in Davos,” said Michael Brown, a senior research strategist at Pepperstone, referring to the World Economic Forum.

This week will bring more corporate earnings in the U.S. and an update on inflation preferred by the Federal Reserve for making policy decisions.

The U.S. Federal Reserve’s next policy meeting is in two weeks. It's expected to keep its benchmark interest rate unchanged, as it strives to balance a slowing jobs market with inflation, which remains above the Fed’s 2% goal. The Bank of Japan has a monetary policy board meeting ending later this week.

In other dealings early Tuesday, U.S. benchmark crude oil lost 49 cents to $58.95 per barrel. Brent crude, the international standard, shed 33 cents to $63.61 a barrel.

The U.S. dollar fell to 157.83 Japanese yen from 158.09 yen. The euro rose to $1.1716 from $1.1645.

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AP Business Writer Elaine Kurtenbach contributed to this report.