US, global markets plunge as Trump’s tariff hike escalate trade war fears

Wall Street and global markets took a sharp downturn Thursday following US President Donald Trump’s announcement of new tariffs on imports from around the world, stoking fears of an escalating trade war and rising recession risks, news agency AP reported. Futures for the S&P 500 plunged 3.4%, while Dow Jones Industrial Average futures dropped 2.8%, signalling steep losses when US markets open. Nasdaq futures fell 3.8%. Oil prices also took a hit, dropping more than 4%, and the US dollar sank to its lowest level against the Japanese yen since early October.This marked the fourth consecutive day of early declines for US markets, with little hope for a recovery by day’s end.After the US market closed on Wednesday, Trump unveiled a 10% baseline tariff on imports from all countries, along with higher tariffs on nations with trade surpluses with the US Notably, China will face a 34% tax on imports, while the European Union will be charged 20%, and Taiwan will face 32%. The move has sent shockwaves through global markets, with China particularly affected by the tariff hike, which now brings its total tariff burden to 64% when factoring in previous measures.Asian markets, though somewhat shielded by the anticipation of further stimulus from Beijing, still felt the brunt of the news. Hong Kong’s Hang Seng index dropped 1.7%, while the Shanghai Composite slid by 0.2%.Trump has argued that the tariffs aim to level the playing field and bring manufacturing jobs back to the US However, economists warn that these measures could dampen growth for the US and the global economy, while increasing inflation, which is already hovering stubbornly above the Federal Reserve’s 2% target.The tariff announcements follow earlier actions, including a 25% tariff on auto imports, levies on steel and aluminium, and expanded tariffs on countries such as China, Canada, and Mexico. Trump’s trade policies also target oil imports from Venezuela, and he has proposed additional tariffs on pharmaceuticals, lumber, copper, and computer chips.Treasury yields swung dramatically, reflecting the uncertainty in the markets. The 10-year Treasury yield dropped as low as 4.04% before settling at 4.11%, down from 4.23% late Wednesday and nearly 4.80% earlier this year.The commodity market also saw significant losses, with US benchmark crude oil shedding $3.36, or 4.7%, to $68.35 per barrel, and Brent crude falling $3.29, or 4.4%, to $71.66 per barrel. Declining oil prices typically signal economic pessimism, as oil is seen as a key indicator of global economic health.In Europe, markets also slumped, though not as severely as in the US Germany’s DAX dropped 2.4%, the CAC 40 in Paris lost 2.7%, and the FTSE 100 in Britain shed 1.5%.Asian markets saw a variety of losses. Tokyo’s Nikkei 225 index briefly dipped 4% before closing 2.8% down. South Korea, impacted by a 25% tariff, saw its Kospi index fall 1.1%. Australia’s S&P/ASX 200 index decreased by 0.9%, and Thailand’s SET index shed 1.1% after being hit with a 36% tariff on exports to the USEconomists like Sal Guatieri and Jennifer Lee from BMO Capital Markets Economics noted that most commodity prices were lower, including gold, as the trade war escalates, creating widespread economic uncertainty.