US President Donald Trump’s sweeping tariffs have triggered a global economic backlash, with the dollar plummeting against major currencies and global stocks falling sharply. The 10% tariffs on US imports, combined with existing levies on European and Chinese goods, have raised concerns about lower growth and inflation in the US.
The dollar fell 2.2% against a basket of trading partners’ currencies, its worst day in a decade, as investors bet on faster interest rate cuts to shore up the economy. The US stock market, led by the S&P 500 and Nasdaq Composite, also declined, with the Stoxx Europe 600 falling 2.5%.
Retailers Adidas and Puma were particularly hard hit, losing 11% and 13%, respectively. Banking group Standard Chartered also fell 11%. Strategists warn that the trade war has created a “stagflationary environment” in the US, where tariffs feed inflation while hitting growth.
The euro rose 2.3% to $1.110, reaching its strongest level since October, as investors sought refuge in safe-haven assets like government bonds. Ten-year US Treasury yields fell 0.17 percentage points to 4.02%, with traders pricing in three or four quarter-point interest rate cuts from the Federal Reserve by the end of 2025.
The economic uncertainty is likely to drive a near-term slowdown in the US economy, reducing full-year 2025 growth to closer to or below 1%. Even if tariffs are reduced by year-end, the near-term shock and associated uncertainty will have a significant impact on global markets.
Source: https://www.ft.com/content/331399ce-fae8-4c92-a8c5-8cc805341baf