Global Markets React to Trump’s Tariff Threats
European shares experienced a decline, while U.S. stock futures plummeted on Monday, following President Trump’s announcement to impose a 10% tariff on imports from eight European countries. The decision was made in response to their opposition to American control of Greenland. The affected countries include Denmark, Finland, Norway, Sweden, France, Germany, the Netherlands, and the United Kingdom.
The German DAX index fell by 1.3% to 24,960.33, and the CAC 40 in Paris declined by 1.9% to 8,101.96. Britain’s FTSE 100 also saw a decline of 0.4% to 10,190.26. In the U.S., the Standard & Poor’s 500 index was down by 1% as of 11:48 a.m. Eastern Standard Time, while the Dow Jones industrial average was down 0.8% and the Nasdaq composite was down 1.2%. It’s worth noting that U.S. stock markets were closed on Monday in observance of Martin Luther King Jr. Day.
European Reaction and Market Impact
European countries targeted by Trump’s tariff threat have strongly condemned the move, stating that it “undermines transatlantic relations and risks a dangerous downward spiral.” This joint statement represents one of the most forceful rebukes from European allies since Trump’s return to the White House. According to Stephen Innes of SPI Asset Management, Trump’s actions are testing the strategic alignment and institutional trust underlying support from Europe, the largest trading partner and provider of financing to the United States.
Innes noted that “in a world where geopolitical cohesion within the Western alliance is no longer taken for granted, the willingness to recycle capital indefinitely into U.S. assets becomes less automatic. This is not a short-term liquidation story. It is a slow rebalancing story, and those are far more consequential.” The impact of Trump’s tariff threats can be seen in the mixed performance of Asian shares, with some markets experiencing gains while others suffered losses.
Asian Markets and Global Economy
In Asia, China reported that its economy expanded at a 5% annual pace in 2025, although it slowed in the last quarter. Strong exports, despite Trump’s higher tariffs on imports from China, helped to offset relatively weak domestic demand. Hong Kong’s Hang Seng index lost 1.1% to 26,563.90, while the Shanghai Composite index gained 0.3% to 4,114.00. The Nikkei 225 in Tokyo declined by 0.7% to 53,583.57, as Japanese Prime Minister Sanae Takaichi prepared to dissolve the parliament for a snap election next month.
South Korea’s Kospi jumped 1.3% to 4,904.66, driven by strong gains in tech-related companies, including a 1.1% increase for computer chip maker SK Hynix. Taiwan’s Taiex added 0.7%, while the Sensex in India fell 0.6%. The global economy is closely watching the developments in the U.S. and Europe, as the ongoing trade tensions and geopolitical uncertainties continue to impact market sentiment.
US Market and Earnings Season
On Friday, U.S. stocks edged lower as the first week of corporate earnings season came to a close, with markets trading near record levels. The S&P 500 fell 0.1%, and the Dow industrials lost 0.2%, while the Nasdaq composite shed 0.1%. This week will bring a broader mix of earnings from airlines, industrial companies, and technology companies, including United Airlines, 3M, and Intel.
The U.S. central bank will also receive an update on inflation this week, with the government’s release of the personal consumption expenditures price index (PCE). The Fed’s next policy meeting is scheduled in two weeks, where it is expected to maintain its current benchmark interest rate, aiming to balance a slowing jobs market with stubbornly high inflation. For more information, visit Here
Image Source: www.latimes.com
