Global Markets suffer bloodbath as Donald Trump's tariffs spark trade war fears
Stock markets fall sharply as Donald Trump imposes sweeping tariffs, sparking fears of economic downturn.
Global markets faced a sharp downturn on Thursday following US President Donald Trump’s announcement of sweeping tariffs targeting both allies and rivals. The aggressive move stoked fears of a prolonged trade war, with investors bracing for potential economic downturns and rising inflation.
Japan’s Nikkei 225 index led the declines in Asia, tumbling over four percent, while US stock futures also dropped significantly. Meanwhile, safe-haven assets saw a surge, with gold reaching an all-time high and the Japanese yen strengthening against the dollar.
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Trump Justifies Tariffs as Trade War Heats Up
The financial turmoil followed Trump’s unveiling of a broad tariff strategy, which he argued was necessary to address longstanding trade imbalances that had left the United States at a disadvantage.
“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump declared during a speech at the White House.
The newly imposed levies include a 34% increase on Chinese imports, 20% on European Union goods, and 24% on Japanese products. Additional tariffs of varying levels will be applied to other countries, with a minimum “baseline” tariff of 10%. Trump also reaffirmed his commitment to a 25% tariff on auto imports.
Investor Reaction and Market Decline
Market analysts described the announcement as a significant shock, with SPI Asset Management’s Stephen Innes noting that Trump’s approach was far more aggressive than anticipated.
“President Trump walked into the Rose Garden and detonated the most aggressive trade shock the market’s seen in decades. This isn’t a jab -- it's a full-on haymaker,” Innes commented.
Wall Street had expected a more restrained policy, but instead, “Trump carpet-bombed the global supply chain,” he added.
Asian markets experienced sharp declines, with Hong Kong’s Hang Seng Index dropping 2.4%, while indices in Sydney, Seoul, and Wellington also saw losses of over 1%. Wall Street futures showed significant declines, with the Dow Jones Industrial Average falling 2.4%, the Nasdaq losing over 4%, and the S&P 500 down more than 3%. European stock futures also saw major losses.
Flight to Safe-Haven Assets
As investors sought stability, traditional safe-haven assets surged. Gold prices reached a new peak at $3,167.84 per ounce, while the yen strengthened to 147.69 per dollar from 150.50 the previous day. U.S. Treasury yields declined to their lowest level in five months as traders shifted towards government bonds.
Energy and Corporate Sectors Take a HitThe tariff fears also hit the energy sector, with oil prices declining on concerns over global demand. West Texas Intermediate (WTI) crude fell 2.6% to $69.88 per barrel, while Brent crude dropped 2.3% to $73.20 per barrel.
Leading corporations in Asia were not spared from the downturn. Sony’s stock declined by 5%, Samsung saw nearly a 3% drop, and Toyota suffered a 5% decrease. Other major automakers such as Nissan and Honda lost 4% and 2.7%, respectively. SoftBank also recorded losses exceeding 4%.
Market Snapshot at 0150 GMT:
Tokyo - Nikkei 225: DOWN 3.4% at 34,525.18
Hong Kong - Hang Seng Index: DOWN 2.4% at 22,638.21
Shanghai - Composite: DOWN 0.5% at 3,333.52
Dollar/Yen: DOWN at 147.81 from 149.39
Euro/Dollar: UP at $1.0918 from $1.0814
Pound/Dollar: UP at $1.3062 from $1.2985
West Texas Intermediate: DOWN 2.6% at $69.88 per barrel
Brent Crude: DOWN 2.3% at $73.20 per barrel
New York - Dow: UP 0.6% at 42,225.32 (close)
London - FTSE 100: DOWN 0.3% at 8,608.48 (close)
With markets experiencing volatility, attention now turns to how affected countries will respond to the tariffs. Investors remain on edge as they await potential retaliatory measures that could further impact global economic stability.
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