Trump’s tariffs sparked market volatility and economic fears
U.S. President Donald Trump announced sweeping new tariffs, including a 10% baseline on most imports and significantly higher rates for specific countries, including 34% on goods from China and 20% on European Union imports. Canadian and Mexican imports remained exempt from tariffs for goods that are compliant with the USMCA (the United States-Mexico-Canada Agreement), but tariffs of up to 25% will apply to non-compliant items, such as foreign-made cars. These measures raised the U.S. average tariff rate to 22%, the highest since 1910, marking a significant shift toward protectionist trade policies.
Markets reacted sharply to the announcement, with the Bloomberg Dollar Spot Index dropping as investors lost confidence in U.S. growth prospects. Global equities and commodities like crude oil (WTI) and copper declined, amid fears of supply chain disruptions and trade retaliation. Meanwhile, bonds rallied as investors sought safe-haven assets, reflecting heightened market uncertainty and concerns over broader economic instability.
Investors are worried that these tariffs could fuel prolonged inflation, increase consumer prices and disrupt global trade relationships. The burden is expected to fall heavily on consumers, who are likely to face rising costs for goods and services.
Looking ahead, key economic indicators — including U.S. inflation and jobs data — will provide further insights into labour market trends and the broader implications of these policies.
Tune into the latest episode of the IG Living Market podcast, as we assess the fallout from the U.S. administration’s new trade policies.
