On Monday, February 3, global markets reacted to US President Donald Trump's decision to impose tariffs on goods from Canada, Mexico, and China. This led to fears of a large-scale trade war and a negative impact on global economic growth.
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Japan's Nikkei index and South Korea's Kospi fell by more than 2.5% each, while Australia's ASX 200, often considered an indicator of Chinese markets, was down 1.8%.
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Stocks in Hong Kong, which include companies from mainland China, were down 1.1% after the opening bell. Trading on mainland Chinese exchanges will resume on Wednesday, February 5, after the Chinese New Year celebrations.
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European stock markets are also showing a significant drop in early trading. Germany's DAX index was down 2% at the opening, while France's CAC 40 index fell 1.9%. Spain's IBEX lost 1.7%, and Italy's FTSE MIB - 1.4%.
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The stock market in Britain, a country with which the United States has more balanced trade relations, joined the global trend. The FTSE 100 index, which tracks the hundred largest companies listed in London, fell by 1.25% in early trading.
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The US dollar index rose by 1%, the biggest jump since the start of the COVID-19 pandemic. The rise was driven by expectations that tariffs will increase inflationary pressures and keep US interest rates high.
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The Canadian dollar fell to its lowest level since 2003, and the euro to its lowest level since November 2022. Emerging market currencies such as the Indian rupee and the Mexican peso also suffered losses.
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Bitcoin fell to $91,439.89, its lowest level in three weeks. Ethereum fell 11% to $2,582.35.
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Oil prices rose: U.S. WTI futures rose 1.9% to $73.89 per barrel, while Brent rose 1% to $76.39.
Over the weekend, Trump imposed a 25% tariff on goods imported from Mexico and Canada and a 10% tariff on goods imported from China, explaining that it was necessary to combat the flow of migrants and drugs into the United States.
Canada retaliated by imposing its own tariffs on U.S. imports, Mexico threatened to do the same, and China said it would appeal Trump's decision to the World Trade Organization.
The duties provided for in the three decrees will take effect on Tuesday afternoon, February 4. The volume of US trade with these three countries is about $1.6 trillion.
As for the EU, Trump said that tariffs on European goods would be introduced in the near future. He also added that the UK is “overreacting” in trade relations with the US, but this situation can be resolved.