President Donald Trump will address the media at the White House on January 30, 2025. Shutterstock, Joshua Ascoff, hours after Black Hawk helicopter collided with an American Airlines flight near DCA Airport Credit
Global markets shaking this week after Donald Trump doubled by clearing new import duties and warned foreign governments that they would have to “pay a lot of money” if they wanted to lift restrictions.
Speaking to the Air Force after a weekend golf in Florida, the US president compared tariffs to “drugs.” That comment did little to calm investors as stock markets in Asia, Europe and the US were noseed on Monday.
“I don’t want anything to come down,” Trump told reporters. “But sometimes you have to take medication to fix something.”
Stock markets plunge all over the world after Trump’s tariff warning
The immediate fallout was cruel. Stock prices in Asia have sunk, US futures have slumped, and global crude oil prices have slipped. In Japan, the Nikkei Index hit an 18-month low, with bank stocks leading the decline. Tokyo’s major financial institutions have already lost almost a quarter of their value in just a few days.
JPMorgan currently predicts that GDP will be able to shrink by 0.3% this year, while Goldman Sachs believes China’s economy is slowing at least 0.7 percentage points. Both banks estimate the possibility of a global recession at 60% and 45% respectively.
Meanwhile, the state is in a hurry to respond. Taiwan has offered to eliminate tariffs and hold discussions. Israel, India and Vietnam all show that they are willing to negotiate. Trump called the phone call with Vietnamese leaders “very productive.”
“They want to talk,” he said.
Global markets respond to panic as Trump’s tariffs trigger sales
New US tariffs begin at 10% overall – already in effect, and customs agents are collecting them as of Saturday. But that’s just the beginning. More aggressive “mutual” tariffs ranging from 11% to 50% are expected to clash with the target country by Wednesday.
Some experts believe Trump simply uses tariffs as leverage. This is a diligent strategy to force foreign governments to negotiate tables. His top economic advisers have tried to calm the market, claiming that this is not an act of attack, but a relocation of the US in global trade.
But not everyone buys it. Billionaire investor Billionaire Bill Ackman, a Trump supporter, said the strategy poses risks to “economic nuclear war.”
And while Trump’s inner circle argues that this isn’t about putting pressure on the Federal Reserve to cut interest rates, the market appears to think that’s not the case. The Reserve Bank of New Zealand is expected to cut interest rates on Tuesday. This is the first domino that potentially fell in a year of global monetary easing.
Tariff uncertainty, remote global markets
For now, businesses, politicians and economists have held their breaths alike. Is this a temporary tactic to score trade transactions, or is it the beginning of a long-term change in US economic policy?
Either way, the world is responding – and fast. The only certainty is that Trump’s “drugs” prove difficult to swallow.
