- 05
- Mar
- 2025
Global stock markets were hit hard on Tuesday, tumbling in response to the US imposing new tariffs on Canada, Mexico and China. Investors are growing increasingly worried that this escalation in the trade war could have widespread economic repercussions.
Shortly after assuming office, US President Donald Trump announced in February the imposition of a 25% tariff on imports from Mexico and Canada, along with an additional 10% tariff on Chinese goods, bringing the total to 20%. He criticized Beijing, Ottawa and Mexico for not doing enough to “combat the flow of fentanyl (a potent opioid) into the United States,” as stated by the White House on X. These actions triggered a swift and severe reaction in global markets, which plummeted on Tuesday.
Asian stocks saw their largest drop in nearly a month, with Tokyo falling 1.4%. The Hang Seng index in Hong Kong dropped 0.2% and China’s CSI 300 index slipped by 0.12%. In Europe, the CAC 40 in Paris fell by 2%, Frankfurt declined by 3%, Milan dropped 3.33% and London saw a 0.94% dip.
In the US, the New York Stock Exchange was similarly shaken. The Dow Jones plunged 1.65%, the Nasdaq dropped 1.95% and the S&P 500 fell by 1.87%, erasing all gains since Trump’s election in November. Meanwhile, the VIX index, known as the “fear gauge” for tracking investor anxiety, soared to its highest level since December.
Automotive Sector Falters
European automakers, heavily reliant on the US market, took a severe hit. In Paris, Stellantis plummeted 9.56%, while Renault dropped 4.95%. In Germany, BMW slid 6.45%, Mercedes fell 5.58% and Volkswagen declined 4.65%. French auto suppliers were also hard-hit, with Valeo dropping 9.99%, Forvia falling 10.69% and OPMobility down 8.48%. Meanwhile, German supplier Continental saw a 10.95% decrease.
The US automotive sector was not spared. Ford fell 3.11%, General Motors dropped 5.77% and Stellantis slipped 7.45%. Investors are concerned that the new tariffs will weaken manufacturers with operations in Mexico and Canada.
On the foreign exchange markets, the dollar weakened by 0.37% against the euro, trading at 1.0527 dollars to the euro. Bitcoin plunged 10.96%, reaching $84,457.
Oil prices also declined after OPEC+ announced plans to continue gradually increasing production starting in April. North Sea Brent fell 1.56%, to $70.50, while US West Texas Intermediate (WTI) dropped 1.15%, to $67.58.
However, gold remained a safe haven in the midst of market turmoil, with its price edging up slightly to $2,911 per ounce.
Global financial markets remain on high alert, with analysts warning that these tariffs could have wide-reaching consequences for the global economy, affecting corporate profits, inflation, economic growth and stock market performance.
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