The decision of President Trump to impose large rates for some of the largest American commercial partners has sent shock waves through the markets all over the world on Monday.
The dollar has strengthened, the oil prices increased and the main equity indices in the United States decreased at the beginning of the negotiations on Monday, although the S&P 500 and the heavy Nasdaq of technology subsequently regained some of their losses on the news that The rates of the goods from Mexico are ready to be delayed one month. The indices had come down 1 % by late morning. Markets in Asia and Europe also collapsed in Asia.
When Mr. Trump was elected, many analysts and investors had swept away his most aggressive tariff speech as bluster intended to ask for negotiations from his global counterparties. But during the weekend, the new administration followed the promise of the president to impose rates of 25 percent on imports from Canada and Mexico, the closest commercial partners in the United States. Canadian energy products and goods from China will be collected at 10 percent. Rates on Canada and China are still in force on Tuesday.
The drop in the ‘P 500 “seems widely justified by increasing tariff fears”, said Yung-Yu but, the main investment strategist for the management of BMO wealth. “The uncertainty in this phase is exceptional – not only of how these any negotiations will take place, but is concerned about how this is only the tip of the iceberg and more rates are on the horizon.”
Shortly after the announcement of Mr. Trump this weekend, leader in Canada and Mexico said they would reply by placing retaliation rates on US goods. The weight of the weight and the Canadian dollar initially decreased against the US dollar. Both later recovered abruptly after the President of Mexico, Claudia Sheinbaum, said he had made an agreement with President Trump to delay the rates on Mexican assets.
Asian and European stock markets also slipped on Monday. Japan’s Nikkei 225 index and South Korea Kospi have each dropped over 2.5 percent. The markets in continental China were closed on Monday for the lunar New Year holidays. The Euro Stoxx 50, consisting of the largest European companies, dropped by 1.6 percent.
The car manufacturers, who poured billions in supply chains in Canada and Mexico who could be affected by new taxes, were affected hard. Tesla and General Motors’ actions went down on Monday morning over 4 percent and Ford Motor was down just over 3 percent. The Toyota engine and the Japanese Nissan engine dropped by about 5 % in negotiations, while the Honda engine collapsed almost 7 percent. The actions of Stellantis, Volkswagen and the Daimler truck manufacturer dropped by over 6 percent and BMW about 4 percent.
The actions of the Silicon Valley Chip Company Nvidia, which was already preparing from a selling of last week linked to the developments of the Chinese artificial intelligence company Deepseek, collapsed over 5 % in early morning trading, dragging the technological sector. Other important American technological companies have also fallen, with Apple more than 2 percent.
Wall Street “Clearly worries about what is the next for Chinese rates” and how this could influence the chipmakers and the beneficiaries of the AI, the Wedbush Securities analysts have written in a research note on Monday.
The semiconductor giant Taiwan SemiConductor Manufacturing Company fell by over 5 % in Monday’s negotiations. Trump had said Saturday that he expected that the rates would be placed on chips, as well as oil and gas at the end of this month. The actions of the producer of British drinks Diageo, who has a remarkable business that matters Mexican Tequila and Canadian whiskey, have decreased by over 3 percent.
The perspective of retaliation that triggered a large -scale tariff war has increased the fears between the investors and economists that the inflationary pressure that persecuted the American economy in the aftermath of the pandemic could return quickly.
Federal Reserve has maintained stable interest rates in last week’s meeting, with indications that emerge that the central bank is wary of the inflationary impact deriving from some of the policies of the White House. On Monday, investors’ expectations on when the Fed cuts the interest rates subsequently moved firmly in the second half of the year.
“The short -term consensus opinion is that the rates will be inflationary,” said John Brady, strategist of the interest rate at RJ O’Brien.
Prices for US crude oil oil have increased by about 1.6 percent, scrolling through other energy prices.
The cryptocurrency markets are collapsed in a large removal with the so -called risky activities. Bitcoin fell by 4 percent, while the actions of the cryptocurrency coinbase trading platform decreased more than 3 percent.
So far, Mr. Trump has not imposed rates directed to Europe, but during the weekend he said that “it would surely happen”.
The initial reaction from China, which as a great exporter could be damaged more than the United States in a global commercial war, was cautious: the Ministry of Commerce said that he would challenge the rates of the World Trade Organization.
“The increase in the uncertainty of commercial policy will increase the volatility of the financial market and will put the private sector to the test, despite the rhetoric in favor of the administration business,” said Gregory Daco, an economist’s head of the Ey- Parthenon.
For traders, rates arrive as a “serious shock”, Jim Reid, a deutsche bank strategist, wrote in a note, after the market had “refused” to take the threat of rates “seriously”.