KEY POINTS
- Global stock markets plunged after Trump’s sweeping tariffs
- Asian markets suffered the worst, with Hong Kong’s Hang Seng down 13.2%
- European bourses and Wall Street followed with sharp losses; the Dow fell 3.6%
- Economists warned of recession risks; Goldman Sachs raised the chance of a US recession to 45%
- China hit back with 34% tariffs on US goods; the EU is considering retaliatory measures
- US oil prices dropped below $60 a barrel amid fears of slowing global demand
- Trump defended the tariffs as “medicine” for unfair trade
NEW YORK / LONDON / BEIJING: Global stock markets plunged on Monday after US President Donald Trump imposed sweeping new tariffs on imports from dozens of countries, sparking recession fears, inflation concerns, and retaliatory trade measures from key American partners.
Trump’s announcement triggered panic across world markets. Asian stocks recorded their sharpest losses in decades, European bourses crashed to multi-year lows, and Wall Street opened with steep declines, continuing a week-long downward spiral in investor confidence.
Trump’s tariff shock
Last week, President Trump announced broad new import duties, including a 10% “baseline” tariff on goods from nearly every country, with higher levies for some nations.
The move stunned markets and trading partners, with China facing a total of 54% tariffs and other Asian economies including Vietnam (46%), Cambodia (49%), and Thailand (36%) also severely affected.
In remarks shared on social media shortly before the markets opened on Monday, Trump defended the tariffs, stating, “Sometimes you have to take medicine to fix something,” adding that “world leaders are dying to make a deal.”
He called on Americans not to panic, urging them to “Be Strong, Courageous, and Patient, and GREATNESS will be the result!”
Trump also warned that countries would have to “pay a lot of money” to get the tariffs lifted, describing them as “medicine” for years of what he claimed were unfair trade practices targeting the US.
Asia hit hardest
Markets across Asia bore the brunt of the initial fallout. The Hang Seng Index in Hong Kong plunged 13.2%—its biggest single-day fall since the 1997 Asian Financial Crisis—while the Nikkei 225 in Tokyo dropped 7.8%.
The Shanghai Composite fell 7.3%, and Taiwan’s Weighted Index recorded its heaviest loss on record, falling 9.7%.
Australia’s ASX 200 shed 4.2%, and South Korea’s Kospi declined 5.6%. Analysts described the regional selloff as a “bloodbath.”
Qian Wang, Asia-Pacific chief economist at Vanguard, told BBC News, “Asia is bearing the brunt of the US tariff hike. While there could be some room for negotiation, a new regime of higher tariffs is here to stay.”
Europe and US join the slide
European stocks also tumbled in early trading. The Stoxx Europe 600 index dropped 5% by afternoon, with more than €1.5 trillion in market capitalisation wiped off in recent days.
In the UK, the FTSE 100 lost nearly 5%, its sharpest drop in five years, while German and French exchanges suffered similar losses.
Wall Street opened sharply lower on Monday. The Dow Jones Industrial Average fell 3.6% to 36,947.62 within the first 20 minutes of trading.
The S&P 500 dropped 3.5% to 4,897.96, while the tech-heavy Nasdaq Composite declined by 3.7% to 15,017.24. Last week, the Nasdaq entered bear market territory, defined as a 20% fall from recent highs.
Economists warn of recession
The economic implications of Trump’s tariffs have rattled investors and analysts. Goldman Sachs revised the probability of a US recession in the next 12 months to 45%, up from a previous estimate of 35%.
JPMorgan now sees a 60% chance of both US and global economic downturns, with its economists slashing US GDP growth forecasts to a 0.3% contraction.
JPMorgan Chase CEO Jamie Dimon, in a letter to shareholders, said, “Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”
He added that the new tariffs are “likely to increase inflation” and undermine business investment.
Stephen Innes, managing partner at SPI Asset Management, told Reuters, “The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast.”
Retaliation and diplomatic fallout
In response, China announced retaliatory tariffs of 34% on US imports, effective Thursday. Chinese Vice Commerce Minister Ling Ji told US business representatives, “The root cause of the tariff issue lies in the United States. Our actions are aimed at bringing the US back to multilateral trade norms.”
European Union trade ministers convened in Luxembourg to debate a coordinated response. France and Germany have advocated targeting US tech giants with new taxes.
“We must not exclude any option,” said French Trade Minister Laurent Saint-Martin, calling for “aggressive” use of the EU’s trade mechanisms.
Germany’s Economy Minister Robert Habeck warned that the EU must be prepared to deploy its “trade bazooka,” referring to a new anti-coercion tool that allows the bloc to penalise economic intimidation.
Ireland, however, voiced caution. Trade Minister Simon Harris said that taxing services “would be an extraordinary escalation,” citing Dublin’s interest in protecting US firms operating in the country.
Global economic tensions
Trump claimed that more than 50 countries have reached out to negotiate tariff relief. Among them is Vietnam, which requested a 45-day delay in the 46% duties.
Israeli Prime Minister Benjamin Netanyahu, whose country faces 17% tariffs, met Trump on Monday in Washington to discuss potential exemptions.
The impact of the tariffs is already being felt in global commodity markets. US oil prices fell below $60 per barrel for the first time since April 2021, reflecting fears of a worldwide slowdown in demand.
Julia Lee, head of client coverage at FTSE Russell, said, “US futures trading lower point to another hard session on Wall Street tonight. The global rout looks far from over.”
