Finance
Morning Bid: New Trump tariffs take effect, EU also in crosshairs
Published by Global Banking & Finance Review®
Posted on March 4, 2025
3 min readLast updated: January 25, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 4, 2025
3 min readLast updated: January 25, 2026
Trump's new tariffs on Canada, Mexico, and China impact global markets, with the EU potentially next. Markets react with stock sell-offs and bond purchases.
A look at the day ahead in European and global markets from Kevin Buckland
Europe wakes up to new U.S. tariffs on Canada, Mexico and China, bringing into starker relief Donald Trump's threat of levies for the EU next.
Trump seems to have shifted to a harder line, saying his neighbours to the north and south had "no room left" for negotiations that would further delay 25% levies, following an earlier one-month stay of execution.
China got slapped with an additional 10% tariff, doubling blanket duties imposed just a month ago. The measures took effect from 0501 GMT.
The response in markets has been swift and decisive: sell stocks and buy bonds.
After Wall Street took a dive on Monday, equities have sold off around Asia and European stock futures are pointing some 1% lower.
Meanwhile, U.S. Treasury yields in Tokyo trading hours are plumbing their lowest since October.
Crude oil has slumped to three-month lows, and an additional drop of 30 cents or so in the price of Brent would extend that milestone by another two months.
It's not just that Trump's trade policies will significantly drag on global growth, but that they will be a self-inflicted wound at a time when the U.S. economy is looking more vulnerable.
Bets for more Federal Reserve easing keep going up.
Traders now price in three quarter-point rate cuts this year, from two just days ago, and leaning towards only one a month earlier.
That's keeping the dollar down, in contrast with the trend previously - when Trump's protectionist policies strengthened the currency.
Elsewhere, the euro and sterling are holding firm against the greenback amid pan-European efforts at a Ukraine peace deal, even as Washington seems to be moving closer to Moscow.
The safe-haven yen is gaining, coming within a whisker of setting a five-month peak earlier on Tuesday.
Japan is the latest to emerge as a potential tariff target, with Trump saying on Monday that he lambasted unspecified Japanese "leaders" by phone for "killing their currency."
Sowing some confusion, Japanese Prime Minister Shigeru Ishiba said on Tuesday he hasn't spoken to Trump on FX policy.
Trump's tariff threats are turning into reality at an increasing pace, and it was only last week that he said 25% levies were on their way for Europe-made "cars and all other things." April 2 is scheduled to bring a round of so-called "reciprocal" tariffs from Washington, on top of those already put in place.
These could all still turn out to be largely a negotiating tactic rather than the new reality for global trade, and some investors and analysts certainly ascribe to that view.
For now though, the market would rather sell first and wait for clarity later.
Key developments that could influence markets on Tuesday:
- Euro zone unemployment rate (Jan)
- New York Fed President John Williams speaks at Bloomberg Invest event
(Editing by Jacqueline Wong)
The U.S. has introduced new tariffs of 25% on Canada, Mexico, and China, with an additional 10% tariff on China that doubles previous duties.
Markets have reacted swiftly, with stocks selling off and bonds being bought as investors adjust to the new trade landscape.
Traders are now pricing in three quarter-point rate cuts this year, reflecting expectations of more easing from the Federal Reserve in response to the economic impact of tariffs.
The dollar is currently down, contrasting with previous trends where Trump's protectionist policies had strengthened the currency, while the euro and sterling remain firm against it.
Some investors and analysts believe that Trump's tariff threats may be more of a negotiating tactic rather than a definitive shift in global trade policy.
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