Trump tariffs wreak havoc on global markets; European, Asian shares sink over 4%

Global financial markets plunged on Monday as trade tensions, sparked by US President Donald Trump’s tariff announcement, sent investors dumping risk assets across the world.

Stocks across Europe and Asian markets came under intense selling pressure, with major indices logging some of their steepest losses since the pandemic.

The dramatic selloff came days after Trump’s reciprocal tariff regime fuelled concerns about a slowdown in the global economy, fulfilling a long-standing campaign pledge to rewrite international trade rules without congressional approval. The move, described by analysts as a "tariff blitz", triggered fears of a prolonged global trade war that could derail the fragile post-pandemic recovery.

Shares in Europe and Asia were witnessing a heavy selloff, with Germany's DAX down 6%, England's FTSE100 dropping 4.71%, France's CAC40 index plunging 5.24% and the Euro STOXX 50 dropping 5.34%.

Most of the Asian markets ended with deep cuts as Japan's Nikkei dropped 7.68%, Hong Kong's Hang Seng tumbled 13.74%, the Shanghai Composite fell 7.34% and South Korea's KOSPI declined 5.57%.

Back home, the NIFTY50 and SENSEX indices were also trading lower by 4% each.

Trump’s decision marks a decisive break from decades of US trade policy, pushing through unilateral tariffs on key trading partners. The new tariffs, which go into effect Wednesday, are expected to raise import costs across sectors and trigger tit-for-tat retaliation.

“The markets have spoken,” said a spokesperson for China’s Commerce Ministry, hinting at a calibrated but firm response. Chinese state media carried reports indicating that no deal would be pursued until the US retracted its demands.

Despite the market carnage, Trump remained defiant, telling reporters that “investors would have to take their medicine” and that he would not consider any trade agreement with China until the US trade deficit was resolved.

US equity futures pointed to continued weakness, with Dow Jones futures down 4%, suggesting the selloff would extend into another session. Market participants are increasingly pricing in the possibility of an economic downturn.

The bond market reflected a swift flight to safety. Yields on 10-year US Treasuries fell 9 basis points to 3.90%, while Fed fund futures jumped, now implying an additional 25 basis point rate cut from the Federal Reserve later this year, news agency Reuters reported.

Economists warned that Trump’s aggressive tariff regime could significantly dent global growth while pushing up consumer prices. The combination of stagflationary pressures — slowing growth alongside rising inflation — is reawakening fears last seen during the early 2020s, the Reuters report added.