Stock markets suffer setbacks worldwide due to Trump's escalation of trade conflicts
In the current economic landscape, Trump's tariff policies continue to influence global stock markets, albeit less pronounced than during the peak of tariff tensions in his administration (2018-2020).
Historically, Trump's tariffs, particularly on Chinese goods and some European products, caused volatility and declines in global stock markets due to fears of a prolonged trade war and disrupted supply chains. Markets in Asia and Europe, with their trade exposure, were particularly sensitive. However, as the tariffs have been set for several years, many companies and markets have adjusted their supply chains and pricing structures, reducing the immediate shock of these tariffs on equities.
European markets, for instance, have shown resilience, focusing more on issues like energy prices, geopolitical tensions, and inflation. Tariff-related concerns remain background factors but do not dominate investor attention as much as they did previously. The Euro Stoxx 50 index, for example, fell by over 1% in early trading, with Germany's Dax Index dropping 1.7% and France's CAC falling 1.8%.
Similarly, Asian stock markets, particularly in China and South Korea, continue to monitor trade policy developments closely, as export businesses remain sensitive to tariffs and trade restrictions. However, the active tariff impositions under Trump have largely stabilized, and the region’s markets are currently more impacted by global economic growth prospects and China’s domestic policy shifts.
India, on the other hand, now faces one of the highest tariff rates among major US trade partners. Trump proposed a 25% tariff on Indian imports, which has led to a decline in India's Nifty 50 index. Taiwan's Taiex also fell due to steep tariffs. Todd McClone, portfolio manager at William Blair, stated that Trump's proposed tariff on Indian imports and potential penalty for India's trade with Russia escalates trade tensions.
The ongoing trade tensions between the US and India are set to be addressed in the sixth-round negotiations, expected to take place in August.
In the US, the NASDAQ slid 0.7% and the S&P 500 slipped 0.3% on Thursday, reflecting a broader trend of market sensitivity to trade policy developments.
While the direct impact of Trump's tariffs is currently more muted, these tariffs remain part of the broader trade policy context that investors consider when evaluating risks, especially in trade-dependent sectors and regions. The ongoing US-China relations, supply chain realignments, and new trade negotiations are now seen as more influential on markets than the tariffs imposed several years ago.
- The ongoing trade tensions between the US and India, such as Trump's proposed 25% tariff on Indian imports, are still evident in the decline of India's Nifty 50 index and Taiwan's Taiex, indicating that tariff-related concerns persist, albeit less dominantly than previously.
- European markets, like the Euro Stoxx 50 index, have adopted resilience, focusing on issues such as energy prices, geopolitical tensions, and inflation rather than tariff-related concerns, which now serve as background factors.
- In the US, the NASDAQ and S&P 500 show sensitivity to trade policy developments, as evidenced by their reactions to recent tariff impositions and trade negotiations, demonstrating that these issues continue to influence finance, business, politics, and general-news headlines.
