Trump's tariff blitz triggers global markets meltdown
Global stock indices fell on Tuesday. The reason is simple: the United States has introduced new tariffs on goods from Canada, Mexico, and China. President Donald Trump's decision has raised fears of a global trade war, which could stall economic growth. Sentiments in Russia are different.
International markets are still overreacting to Donald Trump's decision. The President of the USA implemented 25% tariffs at midnight from Monday to Tuesday on all goods imported from Mexico and Canada (except for Canadian crude oil, which is subject to a 10% tax) and increased tariffs on products from China from 10% to 20%. According to economist Scott Lincicome from the Cato Institute, this is one of the most significant single tax increases in U.S. history, estimated at around $360 billion. This decision concerns the three most important trading partners of the United States, which could have significant consequences for both the American and global economies.
Markets react to Trump's move
The U.S. decision does not favor most markets. The German DAX index fell by more than 1.5%, dropping below 22,800 points after retreating from its record level reached the day before.
Among the worst-performing companies on the German market were BMW (-3.5%), Stellantis (-3.5%), Mercedes-Benz (-2.8%), and Volkswagen (-2.4%). Meanwhile, defense sector stocks continued to rise after President Trump suspended all military aid to Ukraine and Ursula von der Leyen, the President of the European Commission, presented a defense plan to potentially mobilize nearly 800 billion euros ($864 billion) for Europe.
The Polish market also reacts
The French CAC 40 index lost 1%, falling to 8,117 points on Tuesday, moving away from the nearly record level achieved during the previous session. Investor sentiment worsened due to new U.S. tariffs on Canada, Mexico, and China. Stellantis NV's shares performed the worst among individual companies, falling by 4.1% to their lowest level in two months.
Luxury goods sector companies also had weak performances—Kering dropped by 2.6%, LVMH by 2%, and Hermes by 1.6%. In contrast, shares of the defense company Thales rose by 10.3%, reaching a new all-time high. The company exceeded profit expectations for 2024 and raised its sales and profitability forecasts for 2025.
In the American market, futures contracts stabilized on Tuesday after a turbulent start to the week. In Monday's regular trading session, the Dow Jones index fell by 1.48%, the S&P 500 by 1.76%, and the Nasdaq Composite by 2.64%. The leading index initially opened higher but quickly changed direction in the afternoon when President Trump confirmed that the 25% tariffs on Canada and Mexico would take effect on Tuesday, stating that "there is no more room" for negotiations.
In the U.S. technology market, large-cap companies suffered the most significant losses, including Nvidia (-8.7%), Tesla (-2.8%), Microsoft (-2.1%), Amazon (-3.4%), and Broadcom (-6.1%).
Stock prices are not only affected by tariff decisions. Investors are currently focusing on upcoming financial reports from companies like AutoZone, Best Buy, CrowdStrike, and Target, which are expected to be released on Tuesday.
The Russian market is celebrating success
While Western markets face difficulties, the MOEX Russia index held steady at 3,300 points in February, reaching its highest level since May last year. Russian assets are showing strong momentum.
Russian investors' hopes may have a single source. U.S. officials have adopted softer rhetoric toward Russia and criticized Ukraine's approach to wartime law, increasing expectations that the U.S. might lift sanctions and reintegrate Russian capital markets into the global financial system. Gazprom shares have risen by over 70% since testing record lows in November last year, while Sberbank, Rosneft, and Lukoil have also reached six-month highs.
