The global stock markets suffered a sharp decline on Thursday after Trump introduced his extensive new U.S. tariffs that generated concerns about an economic slowdown. The S&P 500 started its day with a 3% decline and then suffered additional losses that hit major companies Nike and Apple severely. The UK’s FTSE 100 dropped 1.5% as European and Asian markets experienced matching declines. During times of economic uncertainty investors tend to buy gold which reached a historic high of $3,167.57 per ounce before settling at $3,090.
Trump announced a 10% global tariff system which imposed elevated import duties on 54% of Chinese products and 46% of Vietnamese products while exempting Canada and Mexico from the new taxes since they already face separate trade restrictions. The Nikkei in Japan plummeted nearly 3% as Hong Kong’s Hang Seng index declined 1.5%. The German Dax moved downwards by 2% while the French Cac 40 index lost 2.9% of its value. The Dow experienced a decline of more than 3% while the Nasdaq suffered a decline of greater than 4% in U.S. market action. The dollar weakened at the same time as the pound reached $1.32 then returned to its previous value.
Market operators show high levels of anxiety about future effects. Business operations become less profitable when tariffs are implemented because companies must decide between absorbing costs or splitting expenses with suppliers or raising prices to avoid decreased sales. Consumer spending in the U.S. represents an estimated 10-15% of global economic activity so the resulting impact could be enormous. Principal Asset Management predicts European economic growth will decrease by almost a full percentage point because of retaliatory measures. According to their projections China will see its growth rate decrease to 4.2% from 4.5%. Without tax cut remedies which Trump mentioned strategist Seema Shah predicts a recession will hit the U.S. economy.
The White House claims this policy will revitalize manufacturing yet Shah expresses skepticism about achieving quick results. The economy faces rapid decline because of tariffs while the process of achieving benefits would need multiple years at best according to Shah. Nike’s stock value decreased 11% because its Asian supply chain absorbed significant damage. Apple suffered a 9% decline in value because it maintains strong ties to Chinese and Taiwanese markets. Best Buy and Target experienced stock declines reaching 12% and 9% respectively. Harley-Davidson which faced previous tariff issues saw its stock price decrease by 4.5%. European athletic brands Adidas and Puma suffered greater than 10% and 9% declines in value because of production restrictions caused by the levies.
