The global stock markets experienced a significant crash due to the trade tariffs imposed by US President Donald Trump. The announcement of these tariffs last week sent shockwaves across Asia and Europe, reminiscent of past market mayhem.
In response to the escalating trade tensions, Trump took to his social media platform, Truth Social, to defend his stance. He expressed confidence in the economy by stating, “Oil prices are down, interest rates are down…there is NO INFLATION.” Despite warnings from experts about the risk of recession, Trump remained steadfast in his belief that the US was benefitting from the tariffs imposed on other countries.
China, being singled out as the “biggest abuser” of tariffs by Trump, retaliated with counter tariffs, further escalating the trade war. The Chinese government announced a 34-per-cent tariff on US imports starting April 10 and threatened to restrict the export of rare earth elements crucial for high-end technology.
Trump accused China of panicking and playing the situation incorrectly, emphasizing his belief that the tariffs would force countries to renegotiate trade deals and bring manufacturing back to the US. He remained adamant in his belief that only the weak would fail in the face of these tariffs.
Meanwhile, US Federal Reserve Chair Jerome Powell warned of the potential negative impact of the tariffs on the US economy. He cautioned that inflation could rise, growth could slow, and unemployment rates could increase. Despite Trump’s calls for immediate interest rate cuts, Powell indicated that it was too soon to consider changes to US monetary policy.
The repercussions of the trade war were felt across global stock markets, with European and Asian markets experiencing significant losses. European indices plummeted, with Paris, London, Amsterdam, Oslo, and Milan all witnessing steep declines. Asian markets, including Japan and Taiwan, also saw sell-offs dominating early trading sessions, leading to temporary halts in trading to curb panic selling.
In India, the Bombay Stock Exchange witnessed a substantial drop, with the Sensex and Nifty indices crashing by about 5 per cent in early trade. The collapse wiped out investors’ wealth worth Rs 20.16 lakh crore, highlighting the impact of the global trade tensions on financial markets.
Overall, the trade tariffs imposed by Trump have unleashed a wave of uncertainty and volatility in global markets, with investors and experts closely monitoring the situation for further developments.
