Global stock markets tumbled on Monday after US President Donald Trump threatened to impose a 20% tariff on virtually all imports, sparking fears of a recession and further market turmoil. Dow futures crashed by more than 270 points (0.7%), while the S&P 500 fell 1% before the opening bell. The Nasdaq dropped 1.4%, wiping out approximately $400 billion in value.
Asian markets were first to react, with Japan's Nikkei 225 index plunging more than 4% to a six-month low. In Europe, London's FTSE 100 shed over 1%, and Frankfurt's DAX fell more than 1.5%. Gold surged to record highs as investors sought safe-haven assets amid the uncertainty.
According to the Wall Street Journal, Trump has pushed his team in recent days to 'be more aggressive' as they finalise the tariff details. The president is said to favour a 'clean number' on nations, giving an edict to make the policy 'big and simple.' Some aides, including Vice President J.D. Vance and Treasury Secretary Scott Bessent, have advocated for a more targeted approach, but Trump's inner circle believes he is willing to risk an economic downturn in the short term.
Economists warned that the tariffs could push US core inflation above 4% next quarter and raise recession risks to 40%, according to JPMorgan's chief economist Bruce Kasman. 'If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies,' said Ajay Rajadhyaksha, head of rates markets at Barclays.
The S&P 500 is on track for its worst month since September 2022, while the Nasdaq Composite is set for its biggest monthly decline since December 2022. The market rout has been exacerbated by Trump's yo-yoing tariff policies, which have also sparked protests among consumers who fear higher prices on cars, groceries, and housing.
