Global markets rattle as Trump escalates trade war with new tariffs

Shares across Europe and Asia, U.S. futures tumbled Thursday following U.S. President Donald Trump's announcement of steep tariff increases on global imports.

The double-digit tariff hikes rattled world markets, raising fears of a global recession.

Futures for the S&P 500 dropped 3.1 percent, while that for the Dow Jones Industrial Average fell 2.6 percent, signaling potential losses when U.S. markets reopen on Thursday.

In Europe, Germany's DAX slipped 1.7 percent to 21,998.48, France;'s CAC 40 lost 1.8 percent to 7,716.66, and Britain's FTSE 100 declined 1.2 percent to 8,506.44. 

Asian markets were hit hard, with Tokyo's Nikkei 225 index briefly dipping 4 percent, before closing 2.8 percent lower at 34,735.93. Major Japanese companies saw sharp losses, including Mitsubishi UFJ Financial Group, with its shares plunging 7.2 percent as the potential impact of the 24 percent tariffs on the export-dependent Japanese economy dashed expectations that the central bank will keep raising interest rates. Mizuho Financial Group skidded 8 percent.

Sony Corp.'s stocks sank 4.8 percent and Toyota Motor Corp. gave up 5.2 percent.

The Japanese yen gained, with the U.S. dollar falling to 147.42 yen from 149.28. The euro rose to $1.0952 from $1.0855.

In South Korea, which was hit with a 25 percent tariff, the benchmark Kospi fell 1.1 percent to 2,486.70.

Hong Kong's Hang Seng lost 1.7 percent to 22,813.22, while the Shanghai Composite index edged 0.2 percent lower to 3,342.01.

The announcement came as a "major shock," Yeap Jun Rong of IG Singapore said in a commentary. "China, in particular, was hit with an additional 34 percent tariff, bringing its total tariff burden to 64 percent when accounting for previous measures."

However, losses were partly blunted by expectations of further economic stimulus from Beijing to offset the impact of the higher tariffs.

In Australia, the S&P/ASX 200 fell 0.9 percent to 7,859.70.

Bangkok's SET shed 1.1 percent after Thailand was assigned at 36 percent tariff on its exports to the U.S. That could cause Thai exports to fall by $7 billion to $8 billion, or about 2.3 percent of the total, Kasem Prunratanamala of CGS International said in a report.

The U.S. has announced that it will impose a tariff as high as 46 percent on imports from Vietnam, a rate significantly higher than that applied to other countries. The U.S. is Vietnam's second-largest trading partner and largest export market, Vietnam has been severely affected by the tariffs. The country's stock market plummeted, with the Ho Chi Minh Index closing down by 6.7 percent, marking the largest single-day drop since 2001.

On Wednesday, U.S. stocks whipped through another dizzying day before Trump's unveiling of his "Liberation Day" tariffs.

The S&P 500 rose 0.7 percent to 5,670.97 after careening between an earlier loss of 1.1 percent and a later gain of 1.1 percent. It has had a pattern this week of opening with sharp drops only to finish the day higher.

The Dow industrials added 0.6 percent to 42,225.32, while the Nasdaq composite climbed 0.9 percent to 17,601.05.

Global financial markets have been volatile amid uncertainty over Trump's escalating trade war. While the U.S. president argues that tariffs will create a fairer global system and bring manufacturing jobs back to the U.S., economists warn they could slow growth, hurt global economies, and exacerbate inflation, which remains above the Federal Reserve's 2 percent target.

After U.S. markets closed, Trump announced a 10 percent baseline tax on all imports, with steeper tariffs targeting countries with trade surpluses. He displayed a chart at the White House outlining a 34 percent tariff on Chinese imports and a 20 percent tariff on goods from the European Union.

Previously, Trump had imposed 25 percent tariffs on auto imports and levies on China, Canada, and Mexico, while expanding tariffs on steel and aluminum. He also introduced import taxes on oil from Venezuela and plans similar measures for pharmaceutical drugs, lumber, copper, and computer chips.

Bond markets mirrored the uncertainty, with 10-year Treasury yields fluctuating from a morning low of 4.11 percent to a later rise at 4.18 percent, reflecting shifting expectations on economic growth and inflation.

Oil prices also declined, with U.S. benchmark crude falling $2.63 to $69.08 per barrel, while Brent crude dropped $2.62 to $72.33 per barrel.

(Cover: U.S. President Donald Trump signs executive orders on tariffs in the Rose Garden at the White House in Washington, D.C., the U.S., April 2, 2025. /VCG)