Global stock markets tumbled today as investors reacted to U.S. President Donald Trump’s announcement of sweeping new tariffs on Canada, Mexico, and China, with additional levies on the European Union (EU) expected to follow. The sharp escalation in trade tensions has triggered widespread market uncertainty, sending stocks, currencies, and commodities into turmoil.
Futures trading ahead of the U.S. market open indicates a rough day on Wall Street, with Dow Jones Industrial Average futures dropping more than 500 points, signaling a major sell-off as investors brace for the fallout of Trump’s tariffs. S&P 500 and Nasdaq futures also fell sharply, reflecting concerns over global economic instability and potential corporate earnings losses.
European and Asian stock markets experienced sharp losses, with the German and French indices falling 2% and London’s FTSE 100 dropping over 1%. Shares in the automotive sector were among the hardest hit, as major global carmakers brace for supply chain disruptions and increased costs. Toyota shares fell 5%, Honda dropped 7.2%, and Volkswagen slid 6%, while Stellantis—parent company of Chrysler, Citroen, Fiat, Jeep, and Peugeot—lost 7%.
Currency markets also felt the shockwaves, with the U.S. dollar strengthening against China’s yuan and the Canadian dollar plunging to its lowest level since 2003. The euro also fell to a two-year low against the U.S. dollar, as concerns mount over Trump’s threats of imposing tariffs on European exports.
In response to the 25% U.S. tariffs on Canadian and Mexican exports and a 10% levy on Chinese goods, affected countries have announced plans for retaliatory measures. Canada and Mexico have vowed to hit back with their own tariffs, while China has promised “corresponding countermeasures” and plans to challenge the tariffs at the World Trade Organization (WTO).
The latest round of tariffs has also sent oil prices climbing, as traders assess the impact of levies on Canada and Mexico, the U.S.’s two largest oil suppliers. Brent crude oil prices rose 1% to $76.50 per barrel, as uncertainty over supply and potential trade restrictions deepens.
Market analysts are warning that the escalating trade war could have long-term consequences for both businesses and consumers. Russ Mould, investment director at AJ Bell, described today’s trading environment as a “sea of red flashing on the markets.”
“Tariffs could lead to higher inflation and halt interest rate cuts, exactly the opposite of what equity investors want to see,” Mould said. “Higher prices could hurt demand, weaken business confidence, and slow economic growth.”
Charu Chanana, chief investment strategist at Saxo Bank, warned that repeated tariff use could weaken the U.S. economy in the long run.
“While tariffs may provide short-term economic benefits to the U.S., they incentivize other countries to reduce their dependence on the U.S., ultimately weakening the dollar’s global dominance,” Chanana said.
President Trump has defended the tariffs, arguing they are necessary to address concerns over illegal immigration and drug trafficking. Over the weekend, he reaffirmed his intention to impose tariffs on the EU, stating that while the UK is “out of line,” a deal could still be worked out.
The trade war’s next phase will unfold on Tuesday at midnight, when the new U.S. tariffs officially take effect. Trump is scheduled to speak with Canadian and Mexican leaders later today, while global markets await further developments with mounting anxiety.