Stock Markets Decline as Trump Tariffs Formalised

Global stock markets experienced significant declines following President Donald Trump’s announcement of new tariffs that would potentially affect imports from all countries. On Monday, investors reacted strongly to Trump’s comments, which indicated a broader scope for the impending tariffs than previously anticipated.

The anxiety rippling through the markets was palpable, especially after Trump stated during a flight on Air Force One that the tariffs would apply universally. This declaration crushed hopes that the upcoming tariffs, designated for announcement on Wednesday, would exclusively target nations with substantial trade imbalances with the United States.

The immediate aftermath was a wave of selling that swept across multiple market indices. In Tokyo, Japan’s Nikkei index fell by 4%, while South Korea’s Kospi dropped by 3%. European markets did not fare any better; the UK’s FTSE 100 declined by 0.9%, Germany’s DAX lost 1.3%, and France’s CAC fell by 1.6%. Market analysts highlighted the pervasive negativity pervading trading floors worldwide as they grappled with the potential ramifications of new tariffs.

Wall Street commenced trading on a sharply negative note, with the S&P 500 down 0.4% and the tech-heavy Nasdaq experiencing a 1.2% decline. Meanwhile, Gold surged to an all-time high of £2,416 per ounce as investors sought safe-haven assets amidst the turbulence.

Economic experts expressed concerns regarding the broader implications of the tariffs, which are forecasted to increase inflation as importers typically pass on costs to consumers. This anxiety is mirrored by a marked decline in US consumer sentiment, which has reached its lowest point since 2022, prompting fears of a potential recession. Goldman Sachs has raised the probability of a recession within the next 12 months to 35%, signalling a considerable downturn that could see a 25% decline in the S&P 500 from its peak.

Additional trade war fears are being compounded by earlier tariffs of 25% on auto imports, leading to a dismal performance for the MSCI index of global stocks, which fell by 4.5% throughout March. The US dollar has similarly witnessed its most challenging month in over two years, declining by 3.5% against a basket of currencies.

Investment managers worldwide are currently reassessing their portfolios, navigating through the uncertain landscape as they confront potential second-order effects tied to a prolonged trade war. Market participants are acutely aware that the unfolding situation could lead to diminished global growth and eroded consumer confidence.