Global stock markets fall as new Trump tariffs loom

Donald Trump has been in office 9 weeks.  (More precisely, 70 days as of this writing.)  The neo-liberal interdependent, rule-based world order built upon the principles of Free Trade could not survive 100 days of one politician with a Sharpie.  There is no resilience in the global trade market. 

Trump's tariffs amount to peanuts in the global economy.  The global GDP is estimated to be $100 trillion (with a T).  And the Trump administration's optimistic projects are the tariffs will generate $600 billion annually.  All the rats are running for the hawsers because they are being denied peanuts?  The Myanmar earthquake may prove to be a bigger disruption because of impact on the supply of palm oil.

We've been lied to for over 30 years, folks.  

S E E D E D   C O N T E N T

Stock markets across the world fell heavily on Monday after Donald Trump suggested that new tariffs he is expected to announce this week would hit "all countries".

Shares fell across Asia-Pacific markets, in Europe and in the US after the US president crushed hopes that "reciprocal tariffs" expected on Wednesday would target only countries that have the largest trade imbalances with the US.

Trump told reporters on Air Force One: "You'd start with all countries. Essentially all of the countries that we're talking about."

Those tariffs on imports into the US are due to be announced on Wednesday, which has been labelled "Liberation Day" by Trump.

On Monday, the threat of a deepening trade war spooked investors. In Toyko, Japan's Nikkei index lost 4% and South Korea's Kospi fell 3%.

The wave of selling swept into European markets as well - the UK's FTSE 100 fell 1.3% to a two-week low, and Germany's DAX and France's CAC both lost 2%.

"A selling wave is sweeping across global markets," said Jochen Stanzl, the chief market analyst at CMC Markets. "The tariffs imposed by the US government and the fear of new announcements as early as Wednesday are creating a bleak atmosphere on trading floors worldwide."

Wall Street opened sharply lower on Monday. The S&P 500 was down by 1.4%, the tech-dominated Nasdaq fell 2.4% and the Dow Jones was off 0.8%.

Gold hit a record high of $3,128 (£2,416) per ounce, as investors rushed into safe-haven assets before Trump's latest tariffs.

Larry Fink, the chief executive of BlackRock, issued veiled criticism of Trump's trade tariffs on Monday, declaring that "protectionism has returned with force".

In his annual letter to shareholders, the boss of the world's biggest investment fund manager said that "nearly every client, nearly every leader" he had spoken to was "more anxious about the economy than any time in recent memory", adding: "I understand why."

Economists fear that adding tariffs on imported goods will push up US inflation as importers pass on costs to customers, and also hurt confidence. Data last Friday showed consumer sentiment across America had fallen sharply this month, to its lowest level since 2022, knocking shares in New York.

Goldman Sachs has now raised its estimate for the probability of a US recession during the next 12 months to 35%, up from 20% previously, and warned that this would typically lead to further losses on Wall Street.

"The historical equity market recession playbook implies a roughly 25% S&P 500 drawdown from the recent market peak. If followed, this pattern would suggest a further 17% drawdown from today's price to a trough level of roughly 4,600," Goldman analysts told clients.

The Swiss bank UBS has cut its forecasts for where the S&P 500 index of US stocks will end the year, from 6,600 points to 6,400.

However, Mark Haefele, the chief investment officer at UBS Global Wealth Management, added: "This also means that there is still meaningful upside for broad US equities by year-end, in our view."

Trade war fears have hurt markets during March, a month in which Trump announced new 25% tariffs on auto imports. An index of global stocks produced by MSCI has fallen by 4.5% this month, with one day to go, its worst monthly performance since September 2022.

The US dollar has also had its worst month in more than two years, having dropped by 3.5% against a basket of other currencies during March.

Over the weekend, Trump said he "couldn't care less" if US carmakers raised their prices because of the new tariffs.

Stephen Innes, a managing partner at SPI Asset Management, said money managers worldwide were "de-risking" portfolios or simply sitting on their hands.

"Investors aren't just reacting to the initial auto tariff volley and the unknowns around reciprocal tariffs - the real jitters stem from the potential second-order effects of a drawn-out trade war: slower global growth, crimped capex [capital expenditure], and waning consumer confidence. The unknown tariff rubric is simply applying the angst," Innes said.