Trump’s tariffs trigger global stock slump, dollar rise amid trade war fears

Global stock markets tumbled on Monday as investors reacted to U.S. President Donald Trump’s sweeping tariffs on Canada, Mexico, and China, fueling fears of a broader trade war that could slow global economic growth.

The pan-European STOXX 600 index fell 1.3% by 08:45 GMT, marking its biggest one-day drop this year. In the U.S., futures for the S&P 500 and the tech-heavy Nasdaq declined 1.6%, while the Russell 2000 index of small-cap stocks, typically seen as beneficiaries of Trump’s policies, slid 2.23%.

Automakers, highly exposed to trade restrictions, saw their shares crash by over 3%, while European technology stocks fell more than 2%. The euro weakened by 0.9% against the dollar, which gained strength as investors sought safe-haven assets.

Cryptocurrency markets also took a hit, with Bitcoin plunging to a three-week low of $91,441.89 overnight before recovering slightly to $95,730.35 at 09:41 GMT, still down 6.2% for the day. Ether, the second-largest cryptocurrency, has shed nearly 25% of its value since Friday, its worst three-day decline since November 2022.

Read also: Europe braces for Trump trade tariffs, as levies on Canada, Mexico, China roil markets

The market turmoil follows Trump’s executive orders imposing 25% tariffs on Mexican and most Canadian imports and an additional 10% on Chinese goods, set to take effect on Tuesday.

Britain’s FTSE 100 index slid 1.4%, and the pound weakened by 0.4% after Trump suggested the UK could avoid tariffs, though he warned of imminent duties on the European Union.

“We’ll see how things work out. It might happen with them, but it will definitely happen with the European Union, I can tell you that,” Trump said on Sunday.

Mexico’s peso tumbled over 2% to its lowest level in nearly three years. In response, Mexican President Claudia Sheinbaum announced retaliatory tariffs, while Canadian Prime Minister Justin Trudeau warned Americans that the trade measures would have “real consequences” for them.

The White House has defended the tariffs as necessary to protect U.S. industries, but analysts warn they could drive up consumer prices and disrupt global trade flows.