World stock markets brace for turbulence after Trump’s latest tariff shock | Stock markets
Global stock markets are set to tumble when trading resumes on Monday after Donald Trump threatened eight European countries with new tariffs until they backed his bid to buy Greenland.
The US president’s plan to impose new trade duties of 10% on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland starting February 1, rising to 25% on June 1, is creating fear in markets and among European businesses.
Trading on brokerage firm IG’s weekend markets showed losses on the London Stock Exchange when it reopens on Monday, while rising geopolitical fears could push precious metal prices towards new record levels. Wall Street, which reopened on Tuesday, is also on a downward path.
“This latest flashpoint has raised concerns about the potential unraveling of NATO alliances and the breakdown of last year’s trade agreements with several European countries, fueling risk-off sentiment in equities and boosting safe-haven demand for gold and silver,” said IG market analyst Tony Sycamore.
IG’s weekend market indicated that Britain’s FTSE 100 index was on track to fall 0.9% on Monday, while the Weekend Wall Street market pointed to a 0.5% decline relative to the Dow Jones industrial average, which tracks 30 major US companies.
Gold rose 0.6% to $4,625 per ounce on IG’s weekend bullion market, surpassing last week’s record high of $4,642 per ounce, while spot silver traded up 0.5% to $90.41.
European leaders, including British Prime Minister Sir Keir Starmer and European Commission President Ursula von der Leyen, criticized Trump’s move on Saturday that threatens to undermine the NATO defense alliance.
Wealth Club’s chief investment strategist Susannah Streeter warned that Trump’s new policy was “triggering new economic chaos” and a setback for the UK economy.
“This is a migraine-inducing development for politicians, who already have to wade through tortuous negotiations to reach the first tranche of tariff agreements and win exemptions for certain sectors. For companies selling to the US and their customers, the move creates another difficult layer of decision-making.”
“They’ve already had to try to cover existing tariffs – there will now be little room to benefit – so this new tax bracket will likely be passed on to American customers,” Streeter warned.
There were signs on Sunday that European business groups were pushing the EU to step up its powers in response. Germany’s engineering association VDMA called on the Commission to consider using its “anti-repression tool” against the United States.
“If the EU capitulates here, it will only embolden the US president to make the next ridiculous demand and threaten more tariffs,” VDMA president Bertram Kawlath said on Sunday.
Hildegard Müller, president of the German automotive industry association, warned that the cost of these additional tariffs would be “enormous” for German and European industry.
William Bain, head of trade policy at the British Chamber of Commerce, predicted new tariffs on goods exported to the US would be “more bad news for UK exporters” and called on the UK government to press for implementation of last year’s trade deal with the US (which was frozen last month).
“We know that trade is a way to strengthen the economy, and we know that the success of transatlantic trade depends on reducing tariffs, not increasing them. The government should prioritize the implementation of tariffs.” [UK-US] “Make an economic prosperity agreement and negotiate calmly to eliminate the threat of these new tariffs,” Bain said.
