Panic gripped global markets as Asian stocks plummeted, with European exchanges expected to follow suit, largely due to U.S. President Trump’s firm stance on tariffs. The Hang Seng index fell over 12%, marking its worst performance since 2008. In retaliation to U.S. tariffs, China announced its own customs duties, heightening trade war risks. Countries are urging Trump to reconsider, while discussions are underway in Europe to respond collectively. Experts warn that these tariffs could lead to inflation and reduced consumer spending.
Panic in Global Markets
On Monday, a wave of panic swept through financial markets as Asian stock exchanges experienced significant declines, with European markets poised for further drops. This turmoil is largely attributed to the steadfast stance of U.S. President Donald Trump regarding the tariffs imposed on international trade.
From Tokyo to Shanghai, passing through Seoul and Taipei, major Asian indices that were dormant on Friday mirrored the trend set by Wall Street, which closed the previous week with its most significant loss since 2020. Notably, Hong Kong’s Hang Seng index plummeted by over 12% on Monday, marking its worst session since the 2008 financial crisis.
Market Reactions and Global Trade Tensions
Both European and U.S. markets are bracing for substantial declines on Monday, with oil prices sinking to lows not seen in nearly four years. In response to the market’s volatile reaction to his trade policies, President Trump stated on Sunday that sometimes “you have to take medicine to heal.” He expressed confidence that the U.S. economy has grown stronger since the announcement of these tariffs, dismissing the market downturn as unintentional.
Trump has accused the U.S.’s trading partners of “pillaging” the economy, leading to his decision to implement a universal 10% customs tax on all imports into the United States, effective Saturday. This rate is set to escalate starting Wednesday for numerous key trading partners, including the European Union (20%) and China (34%).
In retaliation, China unveiled its own tariffs on Friday, escalating the risk of a trade war that could have damaging effects on the global economy. These countermeasures, including a 34% tax on American imports, are intended to steer the U.S. back “on the right track,” according to Ling Ji, Vice Minister of Commerce, who assured that China would remain a “safe haven” for foreign investments.
As tensions rise, countries around the world are actively seeking to persuade Trump to reconsider these tariffs. Over the weekend, Trump claimed to have engaged in discussions with numerous leaders from Europe and Asia, all eager to strike a deal. Treasury Secretary Scott Bessent noted that over 50 countries have approached the U.S. government with proposals to lower trade barriers and stop currency manipulation.
European leaders have intensified their discussions in anticipation of a meeting on Monday in Luxembourg, where EU trade ministers will formulate a collective response to the U.S. tariffs. British Prime Minister Keir Starmer encapsulated the situation, stating, “The world as we knew it has disappeared,” highlighting the challenges to the existing global trade framework.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu is set to meet with Trump to discuss the impending 17% customs tax on Israeli imports. Additionally, Vietnam’s Communist Party Secretary General To Lam has requested a delay of “at least 45 days” before the introduction of a 46% tariff on Vietnamese exports to the U.S., hoping to reach a swift agreement.
Scott Bessent warned that the negotiations surrounding these tariffs are complex and cannot be resolved quickly, suggesting that they may remain in place for several months. Countries seeking to initiate talks are doing so because they recognize the significant impact of these tariffs, according to Kevin Hassett, the chief economic advisor at the White House, who noted that while price increases may occur, he does not anticipate a major effect on U.S. consumers. However, many economists predict that these new tariffs will likely accelerate inflation and dampen consumer spending.