Washington, March 5, 2025 – Stock markets worldwide fell sharply on Tuesday after US President Donald Trump threatened to take a sledgehammer to the global economy, sparking fears of a global trade war following his imposition of a blanket 25 per cent levy on all Canadian and Mexican imports and an additional 10 per cent on Chinese goods.
New York’s Dow Jones Industrial Average and S&P 500 both closed down more than 1 per cent on Tuesday, while the tech-heavy Nasdaq retreated about 0.3 per cent.
Pressured by their respective companies and a desire not to look weak domestically, America’s three biggest trading partners teed up retaliatory tariffs. The three account for some 42 per cent of all imports into the US, the world’s largest economy.
As the world woke up to the fact this was actually happening, analysts sought to assess how long the tariffs were likely to last, with China’s expected to be more “sticky” and less easily rolled back – seen in Trump’s decision to levy lower levels on China.
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“He intends on keeping the China tariffs on for the long term, which means he needs to proceed in such a way that they are seen as manageable, not least from a market perspective,” said Andrew Bishop of consultancy firm Signum Global Advisors.
“Whereas we have high conviction he’ll be repealing the blanket North American tariffs in short order,” he added.
The three countries quickly signaled their resolve to fight back.
“Retaliation has predictably been swift and will hit the US agriculture and auto sector hardest in the days ahead,” said Henrietta Treyz of Veda Partners, a trade consultancy.
China unveiled sanctions on several American firms and additional tariffs of up to 15 per cent on US wheat, corn, fruit, beef and some soybean imports, among other products.
Beijing also announced plans to bring a case to the World Trade Organization, a relatively toothless threat, analysts said, given the long lead time involved and very real chance Trump would disregard any WTO ruling.
Mexican President Claudia Sheinbaum called the US move against her country senseless and said her government would respond with its own countermeasures on Sunday if Washington did not back down.
“There is no reason, rationale or justification to support this decision that will affect our people and nations,” she said. “Nobody wins with this decision.”
And Canadian Prime Minister Justin Trudeau said his country would impose a 2.5pe cent tariff on a further C$125 billion (US$86.5 billion) of American imports within the next 21 days, assuming Washington does not backtrack.
Trudeau described Trump as a “smart guy” but called the tariffs a “very dumb thing to do”.
The American president’s tariff power play saw markets swoon worldwide.
New York’s Dow Jones Industrial Average and S&P 500 both closed down more than 1 per cent on Tuesday, while the tech-heavy Nasdaq retreated about 0.3 per cent.
“The Trump bump is over,” wrote Quartz, noting that the S&P had fully erased all its gains since Trump was elected.
This followed closing declines of 3.54 per cent for Germany’s DAX, 1.27 per cent for Britain’s FTSE 100, 1.2 per cent for Japan’s Nikkei 225 and 0.75 per cent for Hong Kong’s Hang Seng Index. (AP)
