European and Asian stock markets experienced a downturn on Tuesday amidst the implementation of new tariffs by the United States, instigated by President Donald Trump.
China retaliated against these U.S. measures by imposing higher tariffs, up to 15%, on American agricultural exports.
Markets in Europe reflected this tension, with Germany’s DAX falling by 1.8% to 22,733.26, France’s CAC 40 decreasing 1.1% to 8,108.71, and the UK’s FTSE 100 dropping 0.4% to 8,837.92.
Meanwhile, the future contracts for the S&P 500 edged up a slight 0.1%, and those for the Dow Jones Industrial Average remained stable.
Amidst a choppy session in Asia, Tokyo’s Nikkei 225 slipped by 1.2% to land at 37,331.18.
Hong Kong’s Hang Seng Index also saw a reduction of 0.4%, closing at 22,922.16, but the Shanghai Composite Index managed a modest rise of 0.2%, reaching 3,324.21.
Further south, South Korea’s Kospi index shed 0.2% to 2,528.92, Taiwan’s Taiex declined by 0.7%, and Thailand’s SET index saw a 1.1% drop.
On the preceding day, the S&P 500 had declined by 1.8% following Trump’s announcement that there was no room for negotiation to lessen the tariffs that were set for imports from Mexico and Canada.
These tariffs had been deferred once, awaiting further discussion.
The Dow Jones and Nasdaq Composite also recorded losses of 1.5% and 2.6%, respectively.
The newly imposed Chinese tariffs targeting U.S. agricultural products such as beef, corn, and soybeans amplify the challenges of the current trade confrontation, as pointed out by Francis Lun, CEO of Geo Securities in Hong Kong.
Lun suggested that China might cease purchasing American agricultural goods, favoring South American counterparts instead, forecasting a lose-lose outcome for both nations.
Investors had previously hoped that Trump would adopt a more moderate stance regarding global trade.
The S&P 500’s earlier gains since the U.S. election day have now shrunk significantly, after reaching a height spurred by hopes for economic-boosting policies from the Trump administration.
Despite setting a new record the previous month, buoyed by unexpectedly strong profit figures from major U.S. companies, market sentiment turned negative due to weaker-than-anticipated economic data.
This data depicted increasing pessimism amongst U.S. households about inflation, driven by the impending tariffs.
The latest figures from the U.S. manufacturing sector revealed growth, albeit below forecasts, and a more concerning contraction in new orders alongside rising prices due to uncertainty over tariff costs.
This downturn has hit high-performing technology stocks hard, with notable declines on Monday.
Nvidia, for example, fell by 8.8%, and Tesla, owned by Elon Musk, saw a 2.8% drop.
In commodity trading early Tuesday, U.S. benchmark crude oil decreased by 93 cents, bringing the price to $67.44 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude followed suit, decreasing by $1.10 to $70.52 per barrel.
In currency markets, the U.S. dollar weakened slightly to 149.86 Japanese yen from 149.50 yen, while the euro strengthened to $1.0519 from $1.0488.
Additionally, Bitcoin saw a steep decline of approximately 8.7%, reaching about $83,900, according to CoinDesk.
