Donald Trump’s trade war triggers Wall St sell off, global markets tumble
The fallout from Donald Trump’s tariffs hit global markets for a second day as the trade wars triggered Wall St sell off and stoked recession fears.
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Global stock markets wavered following a Wall Street sell-off over fears that US President Donald Trump’s trade policies and steep tariffs on foreign trading partners could push the United States into a recession, as well as devastate countless market linked retirement accounts.
In New York, the Dow index of blue-chip stocks closed down 1.1 percent while the broad-based S&P 500 shed 0.8 percent.
The tech-heavy Nasdaq dipped 0.2 percent, though Tesla and Amazon staged rebounds a day after the index closed four percent lower in its worst session since 2022.
Europe’s main indices ended the day in the red, as did most in Asia.
“Markets are jittery and volatility seems like the only certainty while the White House pushes hard to usher in a new era, seemingly happy for stock markets to be collateral damage,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Traders had initially welcomed Mr Trump’s election win in late 2024, optimistic that his promised tax cuts and deregulation would boost the world’s biggest economy and help equities push to further record highs.
But there is growing concern that tariffs against key trading partners will reignite inflation, forcing the Federal Reserve to again start raising interest rates and triggering a recession.
The US President’s weekend comments that the economy was facing “a period of transition” and his refusal to rule out a recession did little to soothe investor worries.
London’s stock market dipped in morning deals on Tuesday, while Paris and Frankfurt edged higher, helped by gains for infrastructure and defence stocks on European spending plans.
A new wave of US tariffs due this week will see levies of 25 per cent on steel and aluminium imports.
But fears about the future battered Wall Street, where the Nasdaq tanked four per cent owing to another plunge on Monday in high-flying tech titans including Apple, Amazon and Tesla, the latter shedding half its ticker value.
Asia followed suit in early trading Tuesday, with big losses across the board, though they recovered a bit as the day wore on.
Tokyo was hit after Japanese Trade Minister Yoji Muto said he had failed to win an immediate exemption from US tariffs.
Hong Kong was flat and Shanghai ended higher despite falling sharply at the open.
On Tuesday afternoon the Dow continued to tumble, losing 700 points as Mr Trump rekindled the tariff rout with new threats to Canada.
“Trump’s trade policies, including ongoing tariff discussions, are creating uncertainty and fears of economic slowdown,” said Shaun Murison, senior market analyst at the online trading platform IG.
“These tariffs could potentially elevate prices and complicate efforts to reduce interest rates,” he said.
The weak sentiment also filtered through to bitcoin, which tumbled below US$80,000 to its lowest level since November, having hit a record of close to US$110,000 in January.
The cryptocurrency’s losses have also been driven by disappointment that Mr Trump signed an executive order to establish a “Strategic Bitcoin Reserve” without planning any public purchases of it.
Oil prices rebounded after dropping more than one per cent Monday on worries about demand as US recession speculation builds.
However, both main contracts remain down around seven per cent for the year so far.
In company news, shares in Volkswagen climbed two per cent as the German auto giant signalled higher revenue for the year ahead after posting a sharp loss in annual profits for 2024.
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