Stock markets in Europe and Asia have experienced significant declines after US President Donald Trump revealed new tariffs on Canada, Mexico, and China, with the possibility of further tariffs on the European Union. The German and French stock markets fell by around 2%, with the automotive sector facing the sharpest losses, while the FTSE 100 in London dropped by more than 1%. The US dollar also saw a rise, hitting a record high against the Chinese yuan, while the Canadian dollar plummeted to its lowest point in nearly two decades.
The new tariffs include a 25% tax on exports from Canada and Mexico to the US, while Chinese-made goods will face a 10% levy, on top of existing duties. In response, both Canada and Mexico have vowed to impose retaliatory tariffs, while China has pledged "countermeasures" and plans to challenge the US move at the World Trade Organization.
The global economy is bracing for the potential fallout from these trade measures, which could hurt corporate earnings and slow economic growth. Experts have expressed concerns that the tariffs could lead to higher inflation, hinder interest rate cuts, and dampen consumer and business confidence. The dollar’s strength was driven by the expectation that interest rates will remain higher for longer.
Meanwhile, oil prices increased as traders assessed the impact of tariffs on US oil imports from Canada and Mexico, with the Brent crude price rising to $76.50 a barrel.
