Markets React to Trump’s Tariff Plans, But Relief Follows
Global markets hit Monday after US President Donald Trump announced tariffs on Canada, Mexico, China, and the EU. However, a last-minute pause on tariffs on Mexican goods helped shares recover slightly by the end of the day.
How Markets Responded
Early Sell-Off:
- Investors worried that tariffs could hurt corporate earnings and global economic growth.
- The Dow Jones Industrial Average dropped sharply but ended the day down just 0.3%.
- The S&P 500 closed 0.76% lower, while the Nasdaq fell 1.2%.
Partial Recovery:
- A deal between Trump and Canadian Prime Minister Justin Trudeau postponed tariffs on Canada for 30 days.
- Economist Simon French noted that investors had expected a deal, seeing Trump’s threats as part of his negotiating strategy.
Global Impact
Currency Fluctuations:
The US dollar surged, hitting a record high against China’s yuan.
The Canadian dollar fell to its lowest level since 2003.
Stock Market Reactions:
- Germany’s DAX fell 1.4%, with carmakers among the worst hit
- France’s CAC 40 dropped 1.2%.
- London’s FTSE 100 ended the day down 1%.
Industry-Specific Losses:
- Apple (-3%) and Nike were among the worst Dow performers due to their reliance on Chinese manufacturing.
- Tesla & General Motors saw share prices decline.
- Toyota (-5%) and Honda (-7.2%) fell sharply in Japan.
- VW and Stellantis (Jeep, Fiat, Peugeot, etc.) slid 4% in Europe.
- Diageo (-1.9%), a tequila exporter from Mexico, also took a hit.
Trade War Concerns & Future Uncertainty
Trump’s tariff plans were tied to concerns over illegal drugs and migration, affecting the US’s three most significant trading partners.
Potential Retaliation:
- Canada & Mexico threatened counter-tariffs.
- China vowed to challenge Trump’s move at the World Trade Organization.
- The EU could be next, with Trump warning he will “definitely” impose tariffs.
What’s Next?
The Mexico tariff pause has calmed markets for now, but uncertainty remains high as investors brace for broader tensions—especially with Trump’s looming EU tariff threats.
This article was originally published by BBC
