European and US stock markets continue to 'plunge' after Trump's global tariffs!
Stock markets around the world are headed lower on Friday as China matched U.S. President Donald Trump's sharp increase in tariffs in an escalating trade war. China's response to U.S. tariffs triggered an immediate acceleration of losses in markets around the world.
The Ministry of Commerce in Beijing said it would respond to the 34% tariffs imposed by the US on imports from China with its own 34% tariff on imports of all US products starting April 10. The United States and China are the world's two largest economies.
The intensifying trade conflict between the US and China accelerated a slide in the German DAX index on Friday afternoon. Falling more than 1,000 points, or a good 5%, to a daily low of 20,590 points, the main German index extended its weekly decline to around 8%, according to reports from German news agency dpa.
Tim Oechsner, a capital markets expert at Steubing AG, said it was emblematic of the current “high volatility.” European stocks saw some of the biggest losses of the day, with indices down nearly 5%. The price of crude oil fell to its lowest level since 2021.
Spain's largest stock market, the IBEX35 (IBerian-indEX), also fell by nearly 5% on Friday. In mid-day trading, the IBEX35 fell to 12,500 points, as it was also dealt a decisive blow by the US-China-led tariff war.
The Spanish selective index was the one that managed to cope in the best possible way with the impact of the tariffs announced on Wednesday night, recording a drop of 1.2%, relatively small compared to its European counterparts that averaged 3%.
France similarly took a hit, with its biggest market, the CAC 40, falling about 4.3%, in what were the biggest weekly losses for European shares in years. Leading the charge for the European response, French President Emmanuel Macron urged all French companies to halt planned investments in the US.
Germany's acting Economy Minister, Robert Habeck, echoed the same sentiment, adding that Trump would "bend under pressure" if Europe came together in its response. France's Finance Minister, Eric Lombard, however, warned against countermeasures to Washington's tariffs, warning that this would also hurt European consumers.
European Union Trade Commissioner Maros Sefcovic said he held a two-hour phone call with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer.
“I was clear: US tariffs are harmful, unjustified,” Sefcovic said in a post on the social media platform, X. “The EU is committed to meaningful negotiations, but also prepared to defend our interests.” The weight of Trump’s aggressive tariff policy, only exacerbated by Beijing’s reciprocal response, has also dealt a significant blow to US markets.
The S&P 500 fell 322.44 points, or nearly 6%, to 5,074.08, closing the week at its lowest level since March 2020 when the coronavirus pandemic engulfed the global economy. The Dow Jones Industrial Average fell 2,231 points, or 5.5%, while the Nasdaq Composite fell 5.8% to pull back more than 20% from its record set in December.
So far, there have been few or no winners in financial markets from the trade war. Shares of all but 14 of the 500 companies in the S&P 500 index fell on Friday. The price of crude oil fell to its lowest level since 2021. Other building blocks for economic growth, such as copper, also saw prices fall on concerns that the trade war will weaken the global economy.
Trump has given mixed signals on the matter. On Friday, he said Vietnam “wants to lower their tariffs to ZERO if they’re able to make a deal with the U.S.” He also criticized China’s retaliation, saying on his “Social Truth” platform that “China PLAYED WRONG, THEY PANIC — THE ONLY THING THEY CAN’T DO!”
Trump says Americans may feel “some pain” from the tariffs, but added that the long-term goals, including bringing more manufacturing back to the United States, are worth it. On Thursday, shortly after stock markets began to fall following his global tariff announcement, Trump compared the situation to a medical operation, with the U.S. economy as the patient, suggesting things will get worse before they get better.
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