Global markets react to Trump's tariffs, retaliatory actions

(MENAFN) Global markets began the week with selling pressure on Monday as the additional tariffs imposed by US President Donald Trump went into effect on Tuesday. Trump’s new tariffs included a 25 percent customs duty on imports from Canada and Mexico, along with a 10 percent tariff on Chinese goods. This move set the stage for a turbulent period in global trade, triggering responses from the affected countries.

In retaliation, Canadian Prime Minister Justin Trudeau announced that Canada would impose a 25 percent tariff on US imports valued at USD105.5 billion. Of this total, USD20.4 billion worth of goods will be subject to the tariff starting Tuesday, with the remaining USD85 billion to be taxed in 21 days. Trudeau's move marked a clear escalation in the trade conflict, as Canada sought to protect its economy from the impact of the US tariffs.

The Chinese government also reacted strongly, with the Chinese Commerce Ministry stating it would take measures against Trump's tariff decision. China plans to file a complaint with the World Trade Organization, arguing that the new tariffs violate international trade rules. The situation further complicated as Trump indicated plans to impose tariffs on the European Union (EU), prompting a strong response from the EU Commission, which vowed to “respond firmly” to any unfair or arbitrary tariffs placed on EU goods.

As the trade war intensifies, analysts warned that the direction of the market will depend heavily on the potential for further trade sanctions and the global response to these policies. Federal Reserve officials have also expressed caution, acknowledging that Trump’s tariffs could potentially increase inflationary pressures. In light of these concerns, Fed officials have suggested taking a gradual approach to monetary policy while monitoring the evolving situation and its economic effects.

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