President Trump’s announcement of new tariffs on imports from China, Canada, and Mexico sent global stock markets tumbling on Monday. The S&P 500 fell by almost 2% before recovering some losses, ending the day down 0.8%. The tech-focused Nasdaq dropped 1.2%, and the Dow Jones Industrial Average closed down 0.3%.
European markets also suffered, with the FTSE 100 in London falling 1% from last Friday’s record high. Germany’s DAX index declined by 1.5%, France’s CAC 40 decreased by 1.2%, Spain’s IBEX fell by 1.2%, and Italy’s FTSE MIB lost 0.7%. US tech firm Nvidia saw its shares fall by over 5%, while major European carmakers like Volkswagen, BMW, Porsche, Volvo Cars, Stellantis, and Daimler Truck experienced drops between 5% and 6%.
French car parts supplier Valeo’s shares plummeted by 8%. The uncertainty also affected currency markets, with the pound falling 0.6% against the US dollar to $1.23 and rising 0.5% against the euro to €1.20.
Global markets plunge on tariffs announcement
The Canadian dollar hit a 20-year low against the US dollar before recovering some losses. Ontario Premier Doug Ford said he would ban US companies from provincial contracts until the tariffs are removed, potentially costing US businesses tens of billions of dollars in new revenues. Ford also announced that Ontario would terminate its contract with Elon Musk’s Starlink.
Asian markets were not spared, with Japan’s Nikkei slumping 2.8% and Hong Kong’s Hang Seng falling by 1%. The sell-off extended to cryptocurrencies, with Bitcoin reaching a three-week low of $91,441.89 and trading at $95,730.35, down 6.2%. Economists and market analysts expressed concerns about the impact of the tariffs on the global economy.
JP Morgan Chase’s chief economist, Bruce Kasman, stated that the actions challenge the view that the Trump administration will limit disruptive policies while balancing its desire to reduce engagement with the world and support US businesses. Richard Hunter from Interactive Investor commented that “February seems likely to begin with a Trump tariff tantrum,” while Naeem Aslam from Zaye Capital Markets warned of heightened uncertainty in global trade and economic stability. Kathleen Brooks from XTB added that tariffs have the potential to trigger inflation and weigh heavily on global growth, including the US economy.