Global financial markets reacted sharply to President Trump’s announcement of new tariffs on Mexico, Canada, and increased levies on China, triggering a widespread sell-off. The S&P 500 and Nasdaq both fell around 2% as investors worried about the potential impact on global economic growth. The tariffs, including doubling those on China to 20%, prompted concerns about retaliatory measures and their effect on commodity prices, particularly for Australia’s mining and energy sectors. Australia’s S&P/ASX 200 index subsequently fell as well.
Concerns about a potential US recession intensified following a weaker-than-expected manufacturing report, with the ISM manufacturing survey revealing contractions in new orders and employment. This data, coupled with Trump’s trade policies, has led to increased market volatility, as indicated by the surge in the VIX, Wall Street’s fear gauge. Investors are shifting towards defensive assets like gold, while government bond yields decline amid growth outlook anxieties. China and Canada have already announced counter-measures, escalating the trade tensions and further fueling market uncertainty as investors await Trump’s address to Congress for further trade agenda insights.
