Stock markets around the world dropped on Monday after US President Donald Trump announced new tariffs on goods from Canada, Mexico, and China. According to the BBC, the news caused a global sell-off, with shares in major companies falling sharply.
However, markets partially recovered after Trump delayed tariffs on Mexico for one month, following an agreement to send 10,000 troops to the US-Mexico border. The Dow Jones Industrial Average ended the day down just 0.3%, while the S&P 500 fell 0.75% and the Nasdaq dropped 1.2%.
Trump’s tariffs, set to take effect at midnight on Tuesday, include a 25% levy on goods from Canada and Mexico and a 10% tax on Chinese products. He linked the tariffs to concerns about illegal drugs and migrants entering the US. Canada and Mexico have promised to retaliate with their own tariffs, while China said it would challenge the move at the World Trade Organization and take “corresponding countermeasures.”
Investors are worried that tariffs could hurt company profits, slow global economic growth, and lead to higher prices for consumers.
However, many believe Trump’s threats are a negotiating tactic and hope a deal can be reached. Simon French, an economist at Panmure Liberum, told the BBC that markets are betting the tariffs are “simply a negotiating position.”
The uncertainty caused the US dollar to strengthen, hitting record highs against China’s yuan and the Canadian dollar, which fell to its lowest level since 2003. Shares in Asia and Europe also dropped, with Germany’s stock market down 1.4% and France’s CAC 40 index falling 1.2%. In London, the FTSE 100 ended the day down about 1%.
Companies heavily reliant on trade with China, like Apple and Nike, saw their shares fall, with Apple down more than 3%. Car manufacturers, including Tesla, General Motors, Toyota, and Honda, were also hit hard. In Europe, shares in Volkswagen and Stellantis (owner of brands like Chrysler and Peugeot) dropped around 4%. Drinks maker Diageo, which exports tequila from Mexico to the US, saw its shares fall 1.9%.
Russ Mould, an investment director at AJ Bell, said the markets were in a “sea of red” and warned that tariffs could lead to higher inflation, weaker consumer demand, and slower economic growth.
Oil prices also rose as traders assessed how tariffs on Canada and Mexico, the US’s top oil suppliers, would impact the market.
Charu Chanana, a strategist at Saxo Bank, told the BBC that while tariffs might help the US economy in the short term, they could weaken the dollar’s global role in the long run if other countries reduce their reliance on the US.
For now, investors are watching closely to see if Trump’s tariffs will stick or if negotiations will ease the trade tensions.
Credit : BBC
https://www.bbc.com/news/articles/c70kn4676p4o