Asian markets plummeted on Monday as a global stock sell-off intensified amid U.S. President Donald Trump’s tariff hikes and Beijing’s retaliation.
Asian shares nosedived on Monday after a meltdown on Wall Street over U.S. President Donald Trump‘s tariff hikes and the backlash from Beijing.
Donald Trump is a businessman, television personality, and politician who served as the 45th President of the United States from 2017 to 2021.
Donald Trump was born on June 14, 1946, in Queens, New York, where he graduated from the University of Pennsylvania with a degree in economics, according to 'his resume.'
He inherited his father's real estate business and expanded it into a global brand.
Donald Trump has written several bestselling books, including 'The Art of the Deal.' He hosted the reality TV show 'The Apprentice' from 2004 to 2015.
The Impact of Tariffs on Global Markets
U.S. futures signaled further weakness, with the future for the S&P 500 losing 2.5% while that for the Dow Jones Industrial Average shed 2.1%. The future for the Nasdaq lost 3.1%, as Tokyo’s Nikkei 225 index plummeted nearly 8% shortly after the market opened.
Global Market Reactions
Among the biggest losers was Mizuho Financial Group, whose shares sank 11.3%. Mitsubishi UFJ Financial Group‘s stock lost 9.9% as investors panicked over how the trade war may affect the global economy. Chinese markets often don’t follow global trends, but they also tumbled. Hong Kong‘s Hang Seng dropped 9.4% to 20,703.30, while the Shanghai Composite index lost 6.2% to 3,134.98.
Oil Prices and Currency Trading
Oil prices sank further, with U.S. benchmark crude down 4%, or $2.50, at $59.49 per barrel. Brent crude, the international standard, gave up $2.25 to $63.33 a barrel. In currency trading, the U.S. dollar fell to 146.70 Japanese yen from 146.94 yen.
Market Uncertainty and Volatility
Market observers expect investors will face more wild swings in the days and weeks to come, with a short-term resolution to the trade war appearing unlikely. Nathan Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management, said more countries are likely to respond to the U.S. with retaliatory tariffs.
The Global Trade War’s Potential Consequences
The losses came after China matched President Donald Trump‘s big raise in tariffs announced last week, upping the stakes in a trade war that could end with a recession that hurts everyone. Even a better-than-expected report on the U.S. job market wasn’t enough to stop the slide.
The Role of Interest Rates
The Federal Reserve could cushion the blow of tariffs on the economy by cutting interest rates, which can encourage companies and households to borrow and spend. However, Fed Chair Jerome Powell said Friday that tariffs could drive up expectations for inflation and lower rates could fuel still more price increases.
The Federal Reserve, also known as the 'Fed', sets interest rates to control inflation and promote economic growth.
When interest rates rise, borrowing costs increase, reducing consumer spending and investment.
Conversely, lower interest rates stimulate borrowing, boosting economic activity.
The Fed uses monetary policy tools, including open market operations and reserve requirements, to implement its interest rate decisions.
Interest rate changes can have significant effects on the economy, influencing employment, housing markets, and stock prices.
Conclusion
Much will depend on how long Trump’s tariffs stick and what kind of retaliations other countries deliver. The impact of the trade war is already being felt globally, with investors facing uncertainty and volatility in the markets.
In 2018, President Donald Trump imposed tariffs on imported steel and aluminum from various countries, citing national security concerns.
The tariffs ranged from 25% to 10% depending on the country of origin.
This move was met with opposition from trade partners, including Canada, Mexico, and the European Union.
The tariffs were part of a broader strategy to renegotiate trade agreements and protect American industries.
According to the US Census Bureau, the tariffs generated $55 billion in revenue for the US government between 2018 and 2020.
