Global stock markets declined on Thursday after former U.S. President Donald Trump unveiled sweeping tariffs targeting imports from over 90 countries, sending shock waves through markets and heightening investors’ concerns of an impending global trade war.
Trump, campaigning to return to the White House in 2026 presidential elections, unveiled his policy proposal late Wednesday at a press briefing. His proposal calls for immediate tariff increases on imports from nations he accuses of abusing America’s trade generosity – such as electronics and automobiles to textiles and agricultural products.
“The days of freeriding on other nations’ markets are over,” Trump declared in his statement. “We will no longer permit countries to export into our market without providing fair and reciprocal terms.”
Financial markets reacted swiftly and harshly after hearing of President Donald Trump’s speech at G-20 summit. The Dow Jones Industrial Average dropped more than 700 points during early trading Thursday while S&P 500 and Nasdaq Composite index dropped 2.1% and 2.8%, respectively. Major European and Asian indices also saw their values drop significantly: London’s FTSE 100 declined 1.9% while Germany’s DAX dropped 2.4% while Japan’s Nikkei 225 closed down 3.1%.
Economists warn that the broad scope of tariffs could spark retaliatory actions by U.S. trade partners, harming American exporters and disrupting global supply chains. Countries affected include key U.S. allies such as Canada, Germany, Japan, South Korea, Brazil and Australia.
“These tariffs are unprecedented in modern U.S. history,” noted Michelle Navarro, senior trade analyst from Brookings Institution. If implemented, this may elicit countermeasures from major economies and result in full-fledged trade confrontation.”
Some industries most susceptible to retaliation, including U.S. agriculture, automotive manufacturing and consumer electronics saw immediate investor disquiet. Apple, Caterpillar and Ford all experienced declines of over 4% on Thursday’s trading session.
Global business leaders and policymakers reacted in alarm. Christine Lagarde, President of the European Central Bank, called for “calm and cooperation,” urging Washington to reconsider aggressive trade measures. Meanwhile, officials from South Korea and India said they were reviewing the tariff list and would respond “in kind”.
China’s Ministry of Commerce issued a strongly worded statement condemning tariffs and suggesting economic retaliation, declaring: “All consequences resulting from unilateral trade escalation shall fall solely on the United States.”
The announcement caused havoc with currency markets. As investors fled into safer haven assets, such as U.S. dollars, Euro, Japanese Yen, and South Korean Won, saw sharp decreases while Gold prices surged to their highest levels since nearly two months prior.
Analysts speculate that market volatility reflects uncertainty surrounding U.S. trade policy in an age of post-pandemic inflation, supply disruptions and geopolitical instability.
Jordan Feldman, chief economist of Wellington Strategies noted that markets were not anticipating such an abrupt turn towards protectionism. Investors are now struggling to understand what their global trading order might look like under another Trump presidency.
As yet, the White House has not officially responded to Trump’s announcement and it remains unknown if current administration officials will move against or support his plan.
Global investors are bracing themselves for what could be an uncertain period ahead, with the threat of multi-front trade conflict lingering over global economies.
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