Markets Wobble as Trump Threatens New Tariffs on EU and Mexico

Stock markets in Europe mostly dropped on Monday, while Asia saw mixed results, as investors reacted to fresh trade threats from former US President Donald Trump.

Trump announced plans to slap 30% tariffs on goods from the European Union and Mexico, following a series of other recent tariff threats—like 50% on copper and Brazilian goods, 35% on Canadian goods, and up to 200% on pharmaceuticals.

While these moves raise concerns about a negative impact on the global economy, investors remain hopeful that trade deals will be reached before the White House’s August 1 deadline.

Trump said the new tariffs were in response to Mexico’s role in illegal drug trade and a trade imbalance with the EU. The announcement disrupted months of ongoing trade talks between the US and EU.

Despite the tension, European Commission President Ursula von der Leyen said the EU is still committed to reaching an agreement. In a goodwill gesture, the EU also postponed retaliation over separate US steel and aluminum duties.

However, the EU has warned that it could hit back with €100 billion ($117 billion) worth of tariffs on US goods, including cars and planes, if talks break down.

French President Emmanuel Macron supported a deal but said the EU should also prepare strong countermeasures just in case.

Analysts noted that it's surprising to see Trump targeting Mexico and Canada, especially after he signed a trade deal with them during his first term.

• Markets:

  • Frankfurt and Paris saw losses

  • London edged up

  • In Asia, cities like Hong Kong, Shanghai, and Seoul rose

  • Tokyo, Sydney, and Mumbai dipped slightly

Meanwhile, Bitcoin hit a new record of $122,582, and Chinese exports rose more than expected in June, especially to the US, after a recent trade truce between Beijing and Washington.

Investors are also watching the Federal Reserve, as Trump criticized its chairman, Jerome Powell, saying, “I hope he quits.” Reports suggest Trump allies are even looking into Powell’s handling of a costly Fed building renovation, possibly building a case to remove him.

Experts warn that removing Powell could shake the Fed’s independence, push interest rates higher, and cause the US dollar to fall.

In short, markets are holding steady for now, but many remain cautious as August approaches.