Recap | 16 January 2026

• US lawmakers visit Greenland as President Trump waves new tariff threat

• Back-channel diplomacy wards off US action in Iran where protests dissipate

• Canada treats with China on trade in sign of new world order

• US and Taiwan agree on tariff relief, chip investment

  
  

• Small-cap stocks outperform on week amid oil pullback

• Hassett loses front-runner status to succeed Powell as Fed Chair

• FOMC participants emphasize independence and signal January pause

• Administration explores additional affordability measures

  
  

• Venezuela looks to normalize as Rodríguez tightens control

• Europe weighs limited EU membership for Ukraine

• US names executive 'Board of Peace' in Gaza

• Simmering conflict with Kurds raises concern in Syria

  
  

• Insurrection Act contemplated in Minnesota

• Administration, States push for power capacity as data center demands strain grid

• Virginia looks to join redistricting push

• SCOTUS to issue next rulings on January 20, takes up privacy

The next Recap will be published for January 21. Thank you for reading!

EDWARD VON DER SCHMIDT

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Headlines

US lawmakers visit Greenland as President Trump waves new tariff threat

A delegation of US lawmakers traveled to Denmark to assuage concerns about a forced annexation of Greenland. In contrast, President Trump reiterated his demands to take possession of the island one way or another in the name of national security.

Joint exercises in the Arctic did little to soften Trump's adversarial posture as the president threatened the possibility of new tariffs on NATO allies.

Update: On Saturday, President Trump announced that a 10% tariff would be levied on countries actively opposed to his desire to wrest control of Greenland. In response, European lawmakers may block passage of an EU-US trade pact agreed in principle last year.

Comment: Coercive tariff policy may undermine arguments for the use of the International Emergency Economic Powers Act (IEEPA), for which the Supreme Court has yet to rule.

AP:

• European troops arrive in Greenland as talks with US highlight 'disagreement' over island's future (1/15)

• What's next for Greenland and Denmark after difficult meeting with Trump administration (1/15)

• Trump says he may punish countries with tariffs if they don't back the US controlling Greenland

• Trump says 8 European countries will face 10% tariff for opposing US control of Greenland (1/17)

Reuters:

• US lawmakers in Denmark seek to 'lower temperature' after Trump's Greenland threats

• Italy urges NATO to coordinate in Arctic as Greenland tensions escalate

Bloomberg:

• Trump Floats Tariffs Over Greenland as Denmark Woos Congress

• EU Parliament Eyes Tying US Trade Deal Approval to Greenland

WSJ:

• Trump Threatens to Hit Countries That Oppose His Greenland Takeover With Tariffs

Back-channel diplomacy wards off US action in Iran where protests dissipate

Iran appeared to crush dissent after recent protests that left thousands dead and the country on lockdown amid an economic and political crisis.

President Trump asserted that executions of detainees would be stayed, obviating the need for US intervention for now.

Regional allies concerned about collateral damage and economic instability actively discouraged US military action (WSJ).

AP:

• Middle East allies in blitz of diplomacy urged Trump to hold off on Iran strikes, diplomat says (1/15)

• US warns Iran that 'all options are on the table' in emergency UN meeting

• No sign of new protests in Iran as a hard-line cleric calls for executions and threatens Trump

Reuters:

• Four Arab states urged against US-Iran escalation, official says (1/15)

• Iran protests abate after deadly crackdown, Trump says Tehran calls off mass hangings

WSJ:

• How Trump Went From 'Locked and Loaded' to Hitting Pause on Striking Iran

Canada treats with China on trade in sign of new world order

A meeting between Canada's Prime Minister Mark Carney and China's President Xi Jinping brought the resolution of retaliatory tariffs and acknowledgement of an evolving world order, particularly as it applies to trade.

In exchange for a relaxation of tariffs on agricultural exports (namely canola), Canada will scrap a 100% levy on Chinese electric vehicles that had been enacted in conjunction with the US.

Comment: Carney's references to "predictability" highlighted the risks of alienating allies as a consequence of mercurial trade policy.

AP:

• Canadian prime minister hails renewed relations with China during his Beijing visit (1/15)

• Canada agrees to cut tariff on Chinese EVs in return for lower tariffs on Canadian farm products

Reuters:

• Canada, China slash EV, canola tariffs in reset of ties

Bloomberg:

• Canada Inks Trade Deal With China in Break From Trump Agenda

WSJ:

• China and Canada Edge Closer With Progress on Trade

US and Taiwan agree on tariff relief, chip investment

The US and Taiwan announced an agreement to lower tariffs on the island to 15% and offer a host of exemptions in exchange for substantial private investment in domestic semiconductor fabrication.

The US is facing a strategic imperative to reduce its dependence on overseas chip production.

Comment: Any treatment of Taiwan independently of China is likely to draw the latter's ire.

AP:

• US and Taiwan sign $250B trade deal, cutting tariffs on Taiwanese goods (1/15)

• Taiwan hails its 'best' trade deal with US, as China protests

Reuters:

• US and Taiwan reach trade deal, with semiconductor chips and China in focus

• Taiwan aims to be strategic AI partner in US tariff deal

Bloomberg:

• Lutnick Warns Some Korean, Taiwanese Firms May Face 100% Chip Tariffs Unless They Invest in US

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Markets & Economies

Small-cap stocks outperform on week amid oil pullback

Major US indices retreated to end the week while smaller stocks (as reflected in the Russell 2000) continued their relative outperformance.

Subsiding tension with Iran saw oil futures post material declines on Thursday as geopolitical supply risks diminished.

AP:

• Stocks edge a bit below their latest records on Wall Street

Reuters:

• Wall Street ends little changed before long weekend

• US equity funds see largest weekly inflow in 3-1/2 months

Bloomberg:

• Oil Claws Back Some Losses on Iran Risks Heading Into Weekend

WSJ:

• Small Stocks Finish Week at Records

Hassett loses front-runner status to succeed Powell as Fed Chair

President Trump remarked that he may prefer to keep leading Fed-Chair-candidate Kevin Hassett in his post as Director of the National Economic Council (NEC). Former Fed Governor Kevin Warsh became the presumptive favorite to succeed Powell.

The DOJ's investigation of Powell may have complicated the nomination process for the administration, whose attempts to commandeer monetary policy have elicited pushback.

AP:

• Republicans vouch for Fed chair, creating a rare schism with Trump

• Trump says he wants to keep Hassett in White House, cladding Fed chair selection

Reuters:

• Trump tells Hassett he may want to keep him at White House

Bloomberg:

• Trump Voices Reluctance at Nominating Hassett as Fed Chair

WSJ:

• Trump to Fed Chair Contender Hassett: I want to Keep You Where You Are

FOMC participants emphasize independence, signal January pause

Federal Reserve officials including Vice Chair Jefferson emphasized that Fed policy was "well-positioned", strongly suggesting a likely pause at the January 27-28 FOMC meeting.

Comment: Data ambiguity and a need to assess the balance of risks to the central bank's dual mandate may keep the Fed on hold through the Spring, particularly as the Committee seeks to reassure markets of its independence and commitment to containing inflation.

Reuters:

• Fed's Jefferson says current policy stance 'well-positioned'

• Fed should be ready to cut rates again amid job market risks, Bowman says

Bloomberg:

• Fed Officials Back Rate-Cut Pause as Inflation Concerns Linger

Administration explores additional affordability measures

The White House continued to present proposals aimed at addressing affordability concerns via financing mechanisms by seeking to lower borrowing costs and free-up funds for home purchases. Supply constraints present headwinds.

Comment: Possible executive orders have introduced risks related to state intervention in private enterprise.

Reuters:

• Trump housing plan to allow 401(k) money of down payments, adviser says

• Wall Street Banks face tests with Trump's call for credit card rate cap

Bloomberg:

• White House Weighs Executive Action to Cap Credit Card Rates

WSJ:

• White House Plan Would Let Americans Tap 401(k)s for Down Payments on Homes

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Around the World

Venezuela looks to normalize as Rodríguez tightens control

Opposition-leader-in-exile Machado's gift of her Nobel Prize medal notwithstanding, the US moved closer toward regime holdover and interim president Delcy Rodríguez, who walked the line between condemning Maduro's ouster and appeasing US interests.

Separately, the FAA warned of possible military activity in the eastern Pacific.

AP:

• Venezuela's new leader calls for opening oil industry to foreign investment and warmer US ties (1/15)

• CIA director meets Venezuela's acting president in Caracas

• Venezuelan opposition leader is confident about return of democracy but says little of her plans

• FAA urges pilots to exercise caution over eastern Pacific, citing 'military activities'

Reuters:

• CIA director Ratcliffe meets with Venezuela's Rodriguez in Caracas

• Venezuela opposition leader sees eventual elections but cautions about complex path ahead

• FAA warns airlines on Central, South American flights of potential military actions

Bloomberg:

• Venezuela's Rodríguez Consolidates Power After Maduro Ouster

WSJ:

• Delcy Rodríguez Goes From Pariah to the U.S. Pick to Lead Venezuela

Europe weighs limited EU membership for Ukraine

With Ukraine suffering widespread power outages in the face of unrelenting Russian attacks on its energy infrastructure, EU officials explored mechanisms for limited membership to the bloc in order to accelerate Ukraine's recovery in a post-war environment.

AP:

• Ukraine's battered power grid faces unprecedented challenge, energy minister says

Reuters:

• EU executive weighs idea of quick, but limited membership for Ukraine

US names executive 'Board of Peace' in Gaza

The US continued its push toward a second phase of a Gaza peace accord by naming members to the 'Board of Peace' that will oversea a technocratic transitional government as well as disarmament and rebuilding efforts.

AP:

• Trump's Gaza ceasefire plan faces great uncertainty as it moves into a new phase (1/15)

• White House names some leaders with roles in next steps in Gaza, while Palestinian committee meets

Reuters:

• US names Rubio, Tony Blair, Kushner to Gaza board under Trump's plan

Simmering conflict with Kurds raises concern in Syria

Active skirmishes between the new Syrian government and Kurdish factions threatened to imperil a tenuous peace even as integration measures proceeded.

AP:

• Kurdish-led forces to withdraw from contested area in Syria

Reuters:

• Syria's Sharaa grants Kurdish Syrians citizenship, language rights for first time, SANA says

WSJ:

• Exclusive: U.S. Officials Concerned Syria, Backed by Turkey, Will Expand Operation Against Kurds

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Odds & Ends

Insurrection Act contemplated in Minnesota

Heightened tensions amid ICE raids and counter-protests in Minneapolis prompted President Trump to warn of military involvement in order to quell unrest, though he backed off threats to invoke the Insurrection Act.

AP:

• Trump threatens to use the Insurrection Act to end protests in Minneapolis (1/15)

• Insurrection Act: How it's been used and what Trump wants to do with it

Reuters:

• Trump threatens to use military over Minnesota anti-ICE protests

Bloomberg:

• Trump Says He'll Forgo Sending Troops to Minnesota for Now

WSJ:

• Trump Threatens to Invoke Insurrection Act in Response to Minnesota Protests

Administration, States push for power capacity as data center demands strain grid

The White House and several states pushed PJM to address grid-shortages on the Eastern seaboard as skyrocketing data center usage has strained power infrastructure and raised electricity costs.

AP:

• White House and governors pressure grid operator to boost power supply, slow electricity price hikes

Reuters:

• White House seeks emergency power auction for largest US electric grid

Virginia looks to join redistricting push

Legislators in Virginia moved forward with a proposed redistricting referendum as nationwide gerrymandering efforts seek to garner advantages ahead of the midterm elections with control of the House at stake.

AP:

• Virginia lawmakers back redrawing congressional maps, paving the way for a voter referendum

Reuters:

• Virginia Democrats pave way for new map that could net them four House seats

SCOTUS to issue next rulings on January 20, takes up privacy

The Supreme Court announced that its next slate of decisions will be announced on Tuesday, January 20. The Court has yet to make a determination on the administration's use of tariffs.

Separately, the Court has agreed to hear arguments in a case regarding the use of "geofence warrants", which allow authorities to query all location data for a particular place and time.

Comment: The constitutional right to privacy is not explicit but rather "penumbral". Consent to location tracking or other data collection - whether informed or given knowingly - forfeits this right in practice. The geofencing decision may define what constitutes reasonable search in a digital world and will become a seminal ruling.

AP:

• Supreme Court will decide on use of warrants that collect the location history of cellphone users

Reuters:

• Supreme Court plans rulings for January 20 with Trump's tariffs still undecided