Denmark and Greenland have made it clear they will not relinquish sovereignty of the world's largest island.
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The statement came as a surprise after days of mounting tensions, culminating with a threat to impose economic sanctions on eight close US allies which have opposed his plans to seize the semi-autonomous territory of Denmark.
So what could this deal entail and will it be acceptable to Denmark and Greenland - both of which have made it clear they will not relinquish sovereignty of the world's largest island.
President Trump made the announcement on his Truth Social media platform on Wednesday, after talks at the World Economic Forum in Davos, Switzerland.
"Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland," he said.
"This solution, if consummated, will be a great one for the United States of America, and all Nato Nations."
He did not give details, but said talks would continue to reach the deal.
Rutte, for his part, said he had not discussed the key issue of Danish sovereignty over Greenland in his meeting with Trump.
The view in Denmark is that the issue is far from over and that any agreement must still be hammered out together between Greenland and Denmark and the US.
Danish Prime Minister Metter Frederiksen said she been having regular conversations with Rutte and the Danes could negotiate "on everything political; security, investments, economy".
"But we cannot negotiate on our sovereignty. I have been informed that this has not been the case either," she said in a statement on Thursday.
Nato spokeswoman Allison Hart said in a statement after the meeting between Trump and Rutte: "Negotiations between Denmark, Greenland, and the United States will go forward aimed at ensuring that Russia and China never gain a foothold - economically or militarily - in Greenland."
However, one of two Greenlandic lawmakers in the Danish parliament Aaja Chenmitz said "Nato in no case has the right to negot
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