Stock markets tumbled globally on Monday after former President Donald Trump announced sweeping tariffs targeting key U.S. trading partners, reigniting fears of a trade war. The Dow Jones Industrial Average plunged 613 points (-1.5%), while the S&P 500 fell 1.6% and Nasdaq Composite dropped 1.9% in early trading.
Key Developments:
- New Tariffs: 25% on most Canadian/Mexican imports and 10% on Chinese goods took effect February 4, citing immigration/drug concerns
- Global Sell-Off: Japan’s Nikkei fell 2.5%, Germany’s DAX dropped 2%, and London’s FTSE 100 lost 1.25%
- Automaker Slump: Ford and GM shares fell over 3% pre-market due to integrated North American supply chains
- Currency Shifts: Dollar surged 0.8% against peso/loonie, while Bitcoin crashed 7% to $95,000
Market Drivers:
- Trade War Risks: Canada announced $155B in retaliatory tariffs, Mexico activated “Plan B” countermeasures, and China filed a WTO complaint
- Economic Contagion: Analysts predict 0.7-1.1% US GDP slowdown and 2% contraction in Mexico’s economy
- Inflation Fears: Projections show tariffs could push US inflation to 4% annually, doubling the Fed’s target
The sell-off reflects investor concerns that these protectionist measures could reverse 2025’s anticipated economic growth, particularly in tech sectors that rely on global supply chains. With Trump threatening additional EU tariffs and no clear resolution timeline, markets face continued volatility as traders price in stagflation risks
