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Global stocks slide as Trump tariffs hit markets | Global stocks slide as Trump tariffs hit markets |
(about 2 hours later) | |
Stocks around the world sank on Thursday as questions about how businesses and households will swallow the cost of new, sweeping tariffs in the US raised concerns about economic downturn. | |
In the US, the S&P 500, which tracks 500 of the biggest American firms, opened more than 3% lower, with big consumer names such as Nike and Apple among the hardest hit. | |
The UK's FTSE 100 share index fell 1.5% and other European markets also dropped, echoing falls seen earlier in Asia. | |
While stocks fell, the price of gold, which is seen as a safer asset in times of turbulence, touched a record high. | While stocks fell, the price of gold, which is seen as a safer asset in times of turbulence, touched a record high. |
US President Donald Trump said he would impose a 10% tax on imports from around the world, and higher duties on dozens of other countries, including key trade partners such as China and the European Union. | |
The new taxes include a 54% tariff on US imports from China and 46% on goods from Vietnam. | |
Markets across Asia fell sharply after Trump's announcement, with the Nikkei in Japan closing down nearly 3% and Hong Kong's Hang Seng index 1.5% lower. | |
Shares in Europe followed the downward trend, with Germany's Dax index down roughly 2% and France's Cac 40 dropping 2.9%. | |
The price of gold hit a record high of $3,167.57 an ounce at one point on Thursday, before falling back to $3,090. | The price of gold hit a record high of $3,167.57 an ounce at one point on Thursday, before falling back to $3,090. |
In the US, the Dow Jones dropped more than 3%, while the Nasdaq tumbled more than 4%. | |
The dollar also weakened against many other currencies. The pound rose by more than 1% against the US currency to touch $1.32 at one point before slipping back. | The dollar also weakened against many other currencies. The pound rose by more than 1% against the US currency to touch $1.32 at one point before slipping back. |
About a third of US imports, including goods from Canada and Mexico and items from key strategic sectors such as cars and steel, were not affected by Trump's announcement on Wednesday. | |
But the White House said that was because Trump had already targeted them with separate tariffs, or plans to, as he doubles down on a high-stakes policy gambit aimed at reversing decades of liberalisation that shaped the global trade order. | |
Traders are concerned about the global economic impact of Trump's tariffs, which they fear could stoke inflation and stall growth. | |
Tariffs are taxes on imports. Analysts say firms now face a choice of swallowing the new cost, working with partners to share that burden - or passing it onto consumers, and risking a drop in sales. | |
That could have a major impact in the US and globally, where US consumer spending amounts to about 10% and 15% of the world economy, according to some economists' estimates. | |
"This is the worst-case scenario," said Jay Hatfield, chief executive at Infrastructure Capital Advisors. | "This is the worst-case scenario," said Jay Hatfield, chief executive at Infrastructure Capital Advisors. |
Live updates: Reaction to Trump's tariffs announcement | Live updates: Reaction to Trump's tariffs announcement |
At a glance: The countries hit hardest by these plans | At a glance: The countries hit hardest by these plans |
Analysis: The biggest change to global trade in 100 years | Analysis: The biggest change to global trade in 100 years |
Watch: Three things to know about Trump's plans | Watch: Three things to know about Trump's plans |
Nike, which makes much of its sportswear in Asia, was the hardest hit on the S&P, with shares down more than 11%. | |
Shares in Apple, which relies heavily on China and Taiwan, tumbled 9%. | |
Other retailers also fell, with electronics chain Best Buy slumping 12% and Target down 9%. | |
Motorbike maker Harley-Davidson – which was subject of retaliatory tariffs by the EU during Trump's first term as president and has been named as a potential target for retaliation this time – fell 4.5% | |
In Europe, shares in sportswear firm Adidas fell more than 10%, while stocks in rival Puma tumbled more than 9% as key countries where their goods are made were hit with steep levies. | |
Among luxury goods firms, jewellery maker Pandora fell more than 12%, and LVMH (Louis Vuitton Moet Hennessy) dropped 5% after tariffs were imposed on the European Union and Switzerland. | |
George Saravelos, head of FX at Deutsche Bank Research, said the new US trade tariffs were a "highly mechanical" reaction to trade deficits, rather than the "sophisticated assessment" the White House had promised. | George Saravelos, head of FX at Deutsche Bank Research, said the new US trade tariffs were a "highly mechanical" reaction to trade deficits, rather than the "sophisticated assessment" the White House had promised. |
Mr Saravelos warned the move "risks lowering the policy credibility of the [Trump] administration". | Mr Saravelos warned the move "risks lowering the policy credibility of the [Trump] administration". |
"The market may question the extent to which a sufficiently structured planning process for major economic decisions is taking place. After all, this is the biggest trade policy shift from the US in a century," he said. | "The market may question the extent to which a sufficiently structured planning process for major economic decisions is taking place. After all, this is the biggest trade policy shift from the US in a century," he said. |