Before the market opened on Tuesday, former President Donald Trump once again wielded the tariff stick, triggering immediate retaliation from U.S. trading partners. Following Monday’s sharp decline, U.S. stock index futures continued to fall on Tuesday, while European markets also dropped amid escalating global trade tensions.
Market Reactions:
As of press time:
- Dow Jones futures fell 0.34%
- S&P 500 futures dropped 0.63%
- Nasdaq 100 futures declined 0.73%
- 10-year U.S. Treasury yield weakened further to 4.13%
- Spot gold surged 1% to $2,920 per ounce as investors sought safe-haven assets
- U.S. dollar index fell nearly 0.5% to 106, its lowest level since mid-December
- Brent crude oil dropped more than 1%, hitting its lowest point since October
Global Trade War Escalates:
Canada’s Response:
The Canadian Prime Minister’s Office announced that if the United States imposes additional tariffs on Canadian exports starting March 4, Canada will retaliate with a 25% tariff on $30 billion worth of U.S. goods.
Additionally, Ontario Premier Doug Ford threatened to:
- Cut power supply to the United States
- Halt shipments of nickel, a key mineral for U.S. industries
China’s Countermeasures:
China also introduced intensive retaliatory measures, including:
- A 15% tariff on certain U.S. agricultural products
- Anti-circumvention inspections on U.S. fiber optic products
- Adding several U.S. companies to its export control list and unreliable entity list
Impact on European Markets:
European stocks saw a collective decline due to trade uncertainties:
- Germany’s DAX index, which reached a record high on Monday, fell by over 2%
- Automotive stocks, heavily reliant on global trade, led the losses
- Defense sector stocks surged after reports of increased EU military spending
- Thales & Hensoldt saw double-digit percentage gains
U.S. Retailers Brace for Higher Prices:
Target CEO Brian Cornell expressed concerns that Trump’s tariffs on Mexican imports could force price increases on fruits and vegetables as early as this week, impacting consumers.
Markets Await Trump’s Speech:
Trump is set to address Congress after market close on Tuesday (Wednesday morning Beijing time). While details remain uncertain, key topics are expected to include:
- Future tariff policies
- Government spending cuts
- Potential tax cuts
With global markets already on edge, investors will closely watch Trump’s speech for further economic signals.
