Trump's tariffs shake global markets, driving gold to record high
Photo: Trump's tariffs have crashed global markets (Getty Images)
Stock indexes dived on April 3, while safe assets such as reliable bonds and gold surged in value. Investors fear that the new US tariffs will escalate the trade war, threatening to plunge the world into a recession, Reuters reports.
The dollar fell to a six-month low after US President Donald Trump imposed tariffs that raised import taxes to their highest level in a century.
"This is a game-changer, not only for the US economy but for the global economy," said Olu Sonola, Head of US economic research at Fitch Ratings.
According to Sonola, many countries are likely to end up in a recession. "You can throw most forecasts out the door if this tariff rate stays on for an extended period of time," the expert says.
Nasdaq futures dropped by 3.2%, European futures fell nearly 2%, and a 3% decline in Tokyo's Nikkei - hitting an eight-month low - led to significant losses across Asia.
Apple's market capitalization fell by more than $240 billion as its shares dropped 7% in after-hours trading. Nvidia's market capitalization decreased by 5.6%, or $153 billion.
The yield on 10-year US Treasury bonds fell by more than 15 basis points to a five-month low of 4.04%, as markets priced in a higher likelihood of interest rate cuts, even though the tariffs are expected to cause a sharp rise in US inflation.
"You are going to have a supply-side shock via tariffs on the US economy, on prices," said Tai Hui, Asia-Pacific chief market strategist at J.P. Morgan Asset Management. "And then (there's - ed.) the uncertainty when it comes to businesses and consumers, both of which could be problematic for growth."
Trump announced a base import tariff of 10% and significantly higher tariffs for some trading partners, particularly in Asia. China received a 34% tariff, Japan 24%, Vietnam 46%, and South Korea 25%. The European Union was hit with a 20% tariff.
According to Fitch Ratings, the effective US import tax rate under Trump has risen to 22% from 2.5% in 2024, reaching a level last seen around 1910.
Safe assets
Amid expectations of countermeasures from China and Europe, investors rushed to buy safe assets while selling those tied to global growth.
Oil, a key indicator of economic activity, dropped by more than 2%, with Brent crude futures falling to $73.3 per barrel.
Gold prices reached a record high above $3,200 per ounce, while the Japanese yen jumped more than 1% to 147.3 per dollar as currency traders sought a safe asset outside the US dollar. The euro rose 0.6% to $1.0912.
As previously reported, European Commission President Ursula von der Leyen stated that the tariffs imposed by US President Donald Trump are a serious blow to the global economy. She said the European Union is prepared to take countermeasures if negotiations with Washington fail.
