Financial markets stared into the abyss today as fears that a global trade war unleashed by U.S. President Donald Trump will continue to escalate.
The benchmark Euro Stoxx 50 index fell more than 7 percent at the open, on course for its worst day since the panic at the start of the Covid pandemic, while the U.K. FTSE 100 fell more than 5 percent. Crude oil prices, typically a good leading indicator of global economic activity, fell nearly 4 percent to their lowest level in nearly four years.
U.S. stock markets — which had already suffered their third-biggest two-day decline in history last week, tumbling Friday after China announced a 34 percent retaliatory tariff on U.S. imports — were marked down nearly 5 percent.
The moves are the result of a weekend of mixed commentary from U.S. officials, from Trump downward, which made clear that the trade war could get worse before it gets better.
“We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS,” Trump posted on social media on Sunday, reinforcing fears that the measures announced last week are intended to be permanent, rather than a negotiating ploy in the pursuit of other, broader policy goals.
The EU is expected to announce retaliatory measures later this week, while Canada has also matched U.S. tariffs with measures of its own. As such, while U.S. Treasury Secretary Scott Bessent insisted that more than 50 countries had made conciliatory proposals to the U.S. to avoid escalation, three of the U.S.’s largest four trading partners have indicated they are prepared to at least try to stare Trump down.
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