European stocks took a big hit on Monday, adding to a steep drop that started last week. This sell-off came after U.S. President Donald Trump announced new tariffs that caught many investors off guard. The pan-European Stoxx 600 index fell 6% shortly after opening. All sectors were down, with Germany’s DAX index plunging over 9.5%.
Last week, the Stoxx 600 faced its worst week in five years, sinking 8.4%. Only during the early days of the COVID-19 pandemic did it perform worse. The recent tariff announcements raised concerns about a potential global trade war. China responded by imposing 34% tariffs on U.S. goods, while the EU promised to take countermeasures if negotiations falter.
Wall Street felt the impact too, with major tech stocks, often referred to as the “Magnificent Seven,” losing over $1 trillion in a single day. As for U.S. stock futures, they were also slipping as traders reacted to the mounting fallout.
In Asia, the decline continued, especially in China. Countries in the region are expected to suffer significantly from these new tariffs. For instance, Vietnam faces a 46% tariff, while Cambodia and Sri Lanka are hit with tariffs of 49% and 44%, respectively. These nations are crucial to global supply chains, making the tariff situation a tricky challenge for many international companies.
Despite the turmoil, Trump remains firm on his trade policies. He stated that sometimes, “you have to take medicine to fix something,” indicating he believes these tariffs are necessary.
Trade experts warn that this situation might escalate beyond tariffs. A recent study by the Peterson Institute for International Economics suggests that ongoing trade tensions could stunt global economic growth by 0.5% to 1%. This is significant in a world where many economies are already fragile post-pandemic.
As this story unfolds, it’s clear that the ripple effects of these tariffs will be felt worldwide. Investors, businesses, and governments alike will be closely watching how this situation develops and what it means for the future of international trade.
Check out this related article: Breaking News: Markets Plunge as Trump’s Tariffs Disrupt Global Trade – What You Need to Know
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