Trump’s tariff shock rattles markets as investors fear global trade war

Global financial markets plunged into turmoil after US President Donald Trump unveiled sweeping new tariffs on key trading partners, fuelling investor fears of a wave of retaliatory measures and a synchronised economic slowdown.

Trump opted to apply levies calibrated to match half of the duties imposed by foreign governments on American goods. Yet, in a controversial twist, the White House also included indirect trade barriers in its calculations, such as VAT charges, product bans, subsidies, and alleged currency manipulation.

Key US partners will witness a spike in their duties: China faces a 34% tariff, Japan 24%, and the European Union 20%. Canada and Mexico are exempt under the USMCA framework.

The auto sector could suffer even more. European carmakers already face a 25% tariff on vehicle exports to the US, and additional duties will be layered on top.

The move blindsided markets, which had anticipated a more moderate approach, fuelling investor concerns over a renewed trade war and a potential global economic slowdown.

Global equity indices tumbled sharply. Futures on the S&P 500 fell more than 3%, on track for their worst daily loss in nearly three years. The Euro STOXX 50 dropped 2.2% as major exporters bore the brunt of the sell-off.

Shares in Adidas AG and Puma plummeted nearly 10%, with investors fearing that German sportswear firms could lose competitiveness against US rivals like Nike Inc. France’s EssilorLuxottica also fell over 4%.

The French CAC 40 index declined by 1.8%, dragged lower by steep losses in banks and luxury stocks. Societe Generale, BNP Paribas and Credit Agricole dropped 3.8%, 3.7% and 3.2%, respectively. Luxury giants Kering, LVMH and Hermès shed between 2.8% and 3.1%.

Italy’s FTSE MIB lost 1.8%,