Prof G Markets – Greenland Tariffs Are Off — Is There a Deal?

Date: January 22, 2026
Hosts: Ed Elson (with guests Alice Han & William Chu)

Episode Overview

This episode of Prof G Markets unpacks a wild week in global markets, focusing on President Trump’s abrupt withdrawal of Greenland tariff threats, a surging Japanese bond market crisis, and the seismic implications of China’s plunging birth rate. Ed Elson, joined by China economist Alice Han and Japan expert William Chu, dives into the news behind the headlines, examining how erratic policy, demographic trends, and shifting global alliances are roiling capital markets. The conversation is fast-paced, skeptical, and laced with dry humor—a signature of Prof G Markets.

Key Discussion Points & Insights

1. Markets React to Trump's Greenland Tariff Reversal

[02:47 – 04:15]

• Major US indices rallied after President Trump announced he would not use force to acquire Greenland, “calling off his tariff threats.”
• The 10-year Treasury yield fell, the dollar rose, gold retreated from highs, and Intel shares climbed on earnings optimism.
• Ed notes the oddity and volatility, previewing a deeper dive with Scott Galloway in the upcoming Monday episode.

2. China's Record-Low Birth Rate: Causes & Consequences

Guest: Alice Han — Host of China Decode Podcast, China Economist at Greenmantle
[04:15 – 15:19]

The Data & Why It Matters

• China’s birth rate has plummeted to 5.63 per 1,000—the lowest since 1949.
• 2025 saw just 7.93 million births; population dropped by over 3 million.
• “By 2035, 30% of the population larger than the size of America’s population will be above the age of 60.” — Alice Han [06:40]

Causes Beyond the One-Child Policy

• The one-child policy ended in 2016. Declining births now stem from deeper social shifts:
  • Growing independence and education among women.
  • Declining marriage rates — “Young people... decided to opt out of the marriage market and opt out of the fertility market.” — Alice Han [08:30]
• Government response: flexible marriage registrations, annual child subsidies, free preschool, even taxing condoms to discourage contraception (policy “desperation”).
• “Most of that is driven by the fact that people are effectively having less children... this is an inevitable change that is going to be extremely difficult for the Chinese government to counteract.” — Alice Han [04:55]

Macro Impact & Policy Risk Ranking

• Short-term, China’s top macro risks are US trade relations and lagging AI innovation, not demographics.
• Longer-term (post-2035), population aging will be one of China’s top three challenges, especially for its weak pension and social security systems.
• Alice sees pressure ahead to raise the retirement age and expand government spending on elder care—fiscal burdens will climb.

Global Strategic Implications

[12:27 – 15:19]

• Alice notes that, since the rare earths crisis, China feels “vindicated” in its US strategy and is leveraging international divides (e.g., over Greenland) to strengthen ties with Europe and the UK.
• Beijing may use “panda diplomacy” (e.g., trade deals, tariff tweaks) to exploit Western disunity and create “contradictions in the West."
• Watch for UK PM Starmer’s rumored trip to Beijing and shifting European stances on Chinese EVs and investment.

Notable Quote:

• “The more that the US focuses on Greenland and invokes the ire of the Europeans... the more likely it is that the Europeans say, hey China, we’re willing to compromise.” — Alice Han [14:25]

3. Japanese Bond Meltdown: Political and Market Fallout

Guest: William Chu — Senior Fellow, Deputy Director, Hudson Institute Japan Chair
[18:01 – 25:36]

Crisis Background

• Japanese 10-year government bond yields soared as PM Sanae Takaichi pledged tax cuts and spending increases with unclear funding, sparking fears of a debt spiral.
• The move is seen as a bid to shore up support ahead of imminent snap elections (Diet returns Jan 23, election Feb 8).
• “Her priorities are... building up political support and focusing on issues of affordability… cutting the consumption tax.” — William Chu [19:32]

Policy Parallels & Distinctions

• Some compare this to the UK’s “Liz Truss moment,” when unfunded tax cuts spooked markets. Chu disagrees:
  • Takaichi’s tax cuts support a broader agenda of economic security and defense, not just populist giveaways.
  • “She has a solid policy head on her shoulders, even if it is definitely running some risks.” — William Chu [22:16]

Global Market Interconnections

• Japanese bonds are usually stable because most debt is held domestically, but spikes now create uncertainty.
• US investors should care because turbulence in Japan can ripple through global bond and equity markets (and vice versa).
• Defensive posture relates to concerns over US focus (Venezuela, Iran, Greenland): “Do we have to spend more on defense because the US might be overstretched?” — William Chu [24:03]
• Expect more Japanese defense sector investment.

4. The “Meaninglessness” of Trump’s Market-Moving Pronouncements

[25:43 – End]

Market Whiplash over “Non-Announcements”

• Ed skewers the “big news” of Trump’s Davos speech, describing it as a rambling, incoherent performance:
  • “He rambled from one talking point to the next. There was no coherence, there was no message, there was no agenda.” [25:43]
  • Trump confused Greenland and Iceland four times.
  • The supposed tariff reversal sounded like real-time improvisation, not a planned policy.

Cost of Interpreting “Shower Thoughts”

• Markets and businesses are forced to react, spending millions interpreting Trump—even when there isn’t any real content.
  • “What if it’s all actually meaningless? What if it’s all just a way to kill the top time? ... There is no takeaway.” [27:51]
• Ed points to wasted money (e.g., $71 billion/year on tariff uncertainty), wasted corporate effort, and an “irony” where “most of what he says is actually meaningless.”

Notable Quotes & Timestamps

• “By 2035, 30% of the population... will be above the age of 60. So... this is no joke, a huge issue for China.”
  — Alice Han [06:40]

• “Young people... decided to opt out of the marriage market and opt out of the fertility market. That... is the number one factor.”
  — Alice Han [08:30]

• “She has a solid policy head on her shoulders, even if it is definitely running some risks.”
  — William Chu [22:16]

• “He rambled from one talking point to the next. There was no coherence, there was no message, there was no agenda.”
  — Ed Elson [25:43]

• “Most of what he says is actually meaningless. It’s basically just shower thoughts. But because he is the most powerful person in the world, we are forced to make meaning out of it.”
  — Ed Elson [27:10]

Important Timestamps

| Timestamp | Segment | |------------|-----------------------------------------------------| | 02:47 | Markets react to Greenland tariff reversal | | 04:15 | China’s record-low birth rate with Alice Han | | 12:27 | China’s global strategy analysis at Davos | | 18:01 | Japanese bond sell-off context with William Chu | | 21:16 | Liz Truss comparison assessed - Japan vs. UK | | 23:26 | Why Japan’s bond market matters globally | | 25:43 | Trump’s Davos speech and market meaninglessness |

Tone & Takeaways

In signature Prof G Markets style, the episode blends financial sharpness with dry skepticism about the day's headlines. The core message: amid market chaos triggered by haphazard politics and massive demographic shifts, investors need to read between the lines—because sometimes, even the “biggest” news may actually mean nothing.