Shares plummeted across Europe and Asia, while U.S. futures also took a sharp dive after U.S. President Donald Trump announced significant increases in tariffs on imports from various countries. This unexpected move spooked global markets, raising concerns about a potential recession.
U.S. Markets React:
Futures for the S&P 500 dropped by 3.1%, and the Dow Jones Industrial Average fell 2.6%, suggesting possible losses when U.S. markets open later. On Wednesday, U.S. stocks had a volatile day, with the S&P 500 swinging between losses and gains before closing up 0.7%. The Dow rose 0.6%, and the Nasdaq gained 0.9%.
Europe and Asia Hit Hard:
- Germany’s DAX fell 1.7% to 21,998.48.
- France’s CAC 40 dropped 1.8% to 7,716.66.
- The UK’s FTSE 100 shed 1.2% to 8,506.44.
- In Asia, Japan’s Nikkei 225 briefly plunged 4% before closing 2.8% lower.
- South Korea’s Kospi fell 1.1%, while Hong Kong’s Hang Seng dropped 1.7%.
- The Shanghai Composite edged down by 0.2%.
Impact on Major Companies:
Japanese companies were among the hardest hit. Mitsubishi UFJ Financial Group saw a 7.2% drop, while Mizuho Financial Group fell 8%. Toyota’s shares dropped by 5.2%, and Sony’s by 4.8%. The Japanese yen strengthened as the U.S. dollar weakened.
Tariff Details:
Trump announced a 10% baseline tariff on all imports, with specific rates for different regions:
- 34% on Chinese goods
- 20% on European Union imports
- 32% on Taiwanese products
Additionally, he introduced tariffs on auto imports, steel, aluminum, oil from Venezuela, and plans for tariffs on pharmaceuticals, lumber, copper, and chips.
Global Economic Concerns:
Economists warned that these tariffs could stifle global economic growth and worsen inflation, especially in the U.S., where inflation is already above the Federal Reserve’s 2% target.
Market Volatility:
Bond markets mirrored this uncertainty. The 10-year Treasury yield fluctuated, dropping to 4.11% before rising back to 4.18%. Oil prices also fell, with U.S. crude dropping to $69.08 per barrel and Brent crude at $72.33.