Trump Tariffs Trigger Global Stocks and Dollar Rout

Global markets plunged on Thursday as President Donald Trump’s aggressive new trade tariffs sparked fears of a worldwide recession, sending investors scrambling for safe-haven assets like government bonds and the Japanese yen.

Market Turmoil Spreads Globally

The sweeping trade measures include a baseline 10% tariff on imported goods, plus additional “reciprocal” tariffs targeting dozens of countries the Trump administration accuses of maintaining unfair trade barriers. Analysts described the move as more severe than most worst-case scenarios.

In Europe, where the EU now faces a 20% reciprocal levy, stock markets dropped between 1.3% and 2% as officials across the continent expressed outrage. Wall Street futures pointed to a 3% decline at the open, while the dollar suffered its worst single-day drop since November 2022, plunging 2%.

Asian Markets Hit Hard

Asian markets felt particular pressure, with Tokyo’s Nikkei falling 2.7% – its worst weekly performance in nearly two years. While Chinese markets showed relative resilience, dropping just 0.5-1.5%, analysts warned the focus would soon shift to Beijing’s response.

“Many countries will likely end up in a recession,” warned Fitch’s Olu Sonola. “You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”

Bond Markets Benefit From Flight to Safety

The market turmoil sent investors rushing to government bonds, pushing U.S. Treasury yields toward 4% and Germany’s 10-year yield down 8.5 basis points to 2.64%. The Swiss franc, another traditional safe haven, hit a four-month high against the dollar.

Deutsche Bank analysts estimated the tariffs could reduce U.S. growth by 1-1.5% this year, calling the measures a “once in a lifetime” economic event. The new tariffs would raise U.S. import taxes to their highest levels in a century.

China Response in Focus

Market watchers are particularly focused on how China will respond to tariffs exceeding 50% on many of its exports. While Beijing has so far kept the yuan relatively stable, analysts question whether this restraint will continue.

“The key focus over the next few days should clearly be China,” said Deutsche Bank strategist George Saravelos. “How willing will China be to wait for trade negotiations or to absorb this? Or will it try to ‘export’ the shock via a devaluation of the yuan.”