Global markets in turmoil as Trump tariffs wipe £1.5tn off Wall Street

Old_Joe

Following are excerpts from a current report in The Guardian:

Economists say levies of 10-50% have dramatically added to the risk of a worldwide downturn

Global financial markets have been plunged into turmoil as Donald Trump’s escalating trade war knocked trillions of dollars off the value of the world’s biggest companies and heightened fears of a US recession. As world leaders reacted to the US president’s “liberation day” tariff policies demolishing the international trading order, about $2tn (£1.5tn) was wiped off Wall Street and share prices in other financial centres across the globe.

Experts said Trump’s sweeping border taxes of between 10% and 50% on the US’s traditional allies and enemies alike had dramatically added to the risk of a steep global downturn and a recession in the world’s biggest economy. The sell-off swept the globe, sending exchanges plunging in Asia and Europe.

When New York trading opened, the S&P 500 index of the US’s leading companies fell by as much as 4.3% in morning trading, with the tech-heavy Nasdaq fund down 5.1%. Meanwhile, the US dollar hit a six-month low, falling by about 2.2% on Thursday morning, amid a growing loss of confidence in a currency that had previously been considered the safest in the world for most of the past century.

Warning clients to beware a “dollar confidence crisis”, George Saravelos, the head of foreign exchange research at Deutsche Bank, said: “The safe-haven properties of the dollar are being eroded.” The heaviest falls in share prices on Thursday were reserved for US firms with complex international supply chains stretching into the countries that Trump is targeting with billions of dollars in fresh border taxes.

Apple, which makes most of its iPhones, tablets and other devices for the US market in China, plunged by as much as 9.5%, along with steep declines for other large multinationals including Microsoft, Nvidia, Dell and HP. Commodities fell sharply, including a 7% plunge in oil prices, reflecting growing concerns over the global economic outlook.

In a typically defiant response on Thursday, Trump used his Truth Social platform to declare that the his plan was working. “THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!!!”

Tariffs will fall heavily on some of the world’s poorest countries, with nations in south-east Asia, including Myanmar, among the most affected. Cambodia, where about one in five of the population lives below the poverty line, was the worst-hit country in the region with a tariff rate of 49%. Vietnam faces 46% tariffs and Myanmar, reeling from a devastating earthquake and years of civil war after a 2021 military coup, was hit with 44%.

Analysts warned that garment and sports shoe makers, which rely heavily on production in south-east Asia, face rising costs, which will push up prices for consumers around the globe. The share prices of Nike, Adidas and Puma all fell steeply. Analysts said Trump’s measures would raise the average tariff, or border tax, charged by the US to the highest level since 1933, in a development that threatened to sink the US into recession while increasing living costs for consumers.

The non-partisan Tax Foundation thinktank said it estimated the plan would represent a “$1.8tn tax hike” for US consumers, which would cause imports to fall by more than a quarter, or $900bn, in 2025. While the measures will hit the US hard, researchers at the consultancy Oxford Economics said they could sink global economic growth to the lowest annual rate since the 2008 financial crisis, barring the height of the Covid pandemic.

The French president, Emmanuel Macron, said Trump’s decision to impose tariffs of 20% on EU goods was “brutal and unfounded”, while Germany’s outgoing chancellor, Olaf Scholz, called it “fundamentally wrong”. Spain’s prime minister, Pedro Sánchez, said the “protectionist” tariffs ran “contrary to the interests of millions of citizens on this side of the Atlantic and in the US”.

The EU is thought to be preparing retaliatory tariffs on US consumer and industrial goods – likely to include emblematic products such as orange juice, blue jeans and Harley-Davidson motorbikes – to be announced in mid-April, in response to steel and aluminium tariffs previously announced by Trump.