Markets slip as Trump’s Customs War escalates

João da Silva

Business reporter

Getty Images Stock Image of Woman Looking On Screens Showing Information on Financial MarketsGetty Images

Shares in Europe and Asia have fallen after US President Donald Trump announced Tariffs on Canada, Mexico and Chinaand said that duty on the EU would “definitely happen.”

The German and French stock markets were down with approx. 2%, with shares in car manufacturers among the worst hit, while London’s FTSE 100 fell more 1%.

The US dollar also strengthened the currency markets and rose to a record high against China’s yuan, while the Canadian dollar threw himself to its lowest level since 2003.

Investors are stiffened during a turbulent period that can affect earnings for larger companies and dent global growth.

Canada and Mexico are facing 25% tariffs on their exports to the United States. Chinese -made goods are facing a 10% tax, in addition to existing tariffs.

Canada and Mexico have said They will beat back with retaliatory guarry While China promised “similar countermeasures” and promised to challenge Trump’s steps in the World Trade Organization.

Trump has said that tariffs are needed to stop the flow of illegal drugs and immigration in the United States.

And on Sunday night, he said he “certainly would” impose on the EU’s tariffs, even though he said, while Britain was “out of line”, an agreement could be prepared.

“Investors are rattled over the prospects of a full -blown trade war that breaks out,” said Susannah Streeter, head of money and markets at Hargreave’s Lansdown.

Shares in car manufacturers saw the biggest fall as it is seen as the sector that is most prone to disturbances from tariffs.

In Japan, Toyota shares fell 5%and Honda sank 7.2%, while in Europe shares in Stellantis – if marks include Chrysler, Citroen, Fiat, Jeep and Peugeot – fell 7%and VW decreased 6%.

Shares in drinks Maker Diageo – which exports Tequila from Mexico to the United States – dropped 3%.

Getty Images Cargo Ships Load and unload foreign trade containers at the fully automatic terminal in the Qingdao gate in China.Getty Images

Russ Mold, investment director at AJ Bell, said there was a “sea of ​​red flashing in the markets”.

Tariffs can lead to “higher inflation and put a stop to further interest rate reductions at the moment – exactly the opposite of what stock investors want to happen,” he added.

“Higher prices can damage demand, and there may be a worn effect that knocks business and consumer confidence and lives in weaker economic activity.”

The prospect of interest rates that remain higher for a longer period of time helped strengthen the dollar.

In addition to the dollar rising against China’s yuan and the Canadian dollar, the euro fell to more than a two-year-old low against the US currency.

Oil prices also rose after news about tariffs when dealers tried to analyze how customs duties in Canada and Mexico – the two largest sources of oil import to the United States – would affect the market.

Benchmark Brent crude oil price rose approx. 1% of $ 76.50 per Barrel.

The tariffs announced by the Trump administration over the weekend are targeting the three largest trading partners of the United States.

Chief Investment Strategist at Investment Bank Saxo, Charu Chanana, warned that although duty could be beneficial to the US economy in the short term, they pose significant risks in the long term.

“Repeated use of customs rates would incentive other countries to reduce the dependence on the United States and weaken dollars global role,” she added.

Trump has said he will talk to Canada and Mexico leaders on Monday about the tariffs to come into force at midnight Tuesday.