US Markets Tumble on Trump's Tariff Announcement

Global markets opened in the red on Monday following President Donald Trump's weekend announcement of tariffs on imports from Canada, Mexico, and China. The tariffs, set to take effect Tuesday, sparked concerns about inflation and decelerated Federal Reserve rate cuts.

US Stock Market Drop

At market open, the S&P 500 plummeted by 1.5%, while the Nasdaq and Dow Jones fell by 1.9% and 1.2%, respectively. This decline mirrored the downward trend witnessed in Asian and European markets.

Asian Market Impact

In Asia, Hong Kong's Hang Seng Index closed marginally lower after initial losses of 2.3%. Japan's Nikkei 225 Index lost 2.7%, South Korea's Kospi Index shed 2.5%, and Australia's ASX 200 Index dropped 1.8%. Taiwan's Taiex Index closed 3.5% lower.

European Market Decline

European markets were also hit hard, with the UK's FTSE 100 Index falling by 1.4% and the Stoxx 600 Index losing 1.3% after Trump's announcement of potential tariffs on European Union imports.

Currency Market Reactions

The US dollar surged, with the Dollar Index gaining 0.85%. The Canadian dollar reached its lowest level in over two decades. Conversely, the euro depreciated by 1%. The Mexican peso also weakened against the US dollar, losing 1.5%.

Economic Implications

Analysts warn that the tariffs could lead to short-term inflation in the US and may hinder rate cuts by the Federal Reserve. Additionally, businesses in sectors such as automotive and agriculture are expected to be adversely impacted.

Investor Response

Investor sentiment has taken a sharp downturn as Trump's rhetoric on tariffs has shifted from words to actions. Experts believe that the tariffs pose significant risks to global markets and could disrupt the benign macroeconomic outlook for 2025.