Global Markets Tumble as Trump Imposes Tariffs
In a dramatic turn of events, shares in Europe and Asia took a nosedive on Monday as US President Donald Trump made good on his threat to slap tariffs on Canada, Mexico, and China.
The main European stock markets plummeted by more than 1%, while Japan’s stock market closed down a staggering 2.7%.
As the dust settled, the US dollar flexed its muscles on the currency markets, reaching a record high against China’s yuan. Meanwhile, the Canadian dollar suffered a sharp decline to its lowest level since 2003.
Investors around the globe are bracing themselves for a rocky road ahead, as the tariffs could potentially dent the earnings of major companies and stifle global growth.
Canada and Mexico are set to face tariffs of 25% on their exports to the US, while Chinese goods will bear an additional 10% levy on top of existing tariffs.
Responding in kind, Canada and Mexico have vowed to retaliate with their own tariffs, while China has promised “corresponding countermeasures” and intends to challenge Trump’s actions at the World Trade Organization.
Trump justified the tariffs by citing the need to stem the flow of illegal drugs and immigration into the US.
With the EU also in the crosshairs, Trump declared that tariffs on the region are inevitable. However, he expressed openness to negotiating a deal with the UK.
“Investors are on edge as the specter of a full-blown trade war looms large,” remarked Susannah Streeter, head of money and markets at Hargreaves Lansdown, as she painted a picture of a global economy bracing for impact.
As the news reverberated, carmakers bore the brunt of the fallout in Europe, with the sector poised to suffer the most from the tariffs’ disruption.
Stellantis, encompassing brands like Chrysler, Citroen, Fiat, Jeep, and Peugeot, saw its shares plummet by nearly 6%, while VW took a hit of 5.7%.
Even drinks giant Diageo, known for exporting tequila from Mexico to the US, felt the sting as its shares dropped by 3%.
The tariffs announced by the Trump administration target the US’s top three trading partners, further escalating tensions on the global stage.
Chief investment strategist at investment bank Saxo, Charu Chanana, cautioned that while tariffs may offer short-term benefits to the US economy, they pose substantial long-term risks.
“Repeated tariff actions could incentivize other countries to reduce their dependence on the US, thereby weakening the dollar’s global standing,” she warned.
As the clock ticks towards the midnight deadline on Tuesday, Trump is set to engage with the leaders of Canada and Mexico to discuss the impending tariffs. — BBC
