Global stock markets extended losses on Monday as investors reacted to the Trump administration’s impending tariff announcement, expected to target nearly all trading partners. President Donald Trump has warned that the measures will include "all countries," heightening fears of escalating trade tensions.
Major U.S. indices declined, with the S&P 500 dropping 0.5% and the Nasdaq falling 1.4% as investors retreated from riskier assets. The sell-off mirrored global trends, with Japan’s Nikkei 225 plunging 4%, South Korea’s Kospi sinking 3%, and France’s CAC 40 losing 1.5%.
Gold prices surged to $3,150 per ounce, nearing another record high, as traders sought safe-haven assets amid growing economic uncertainty.
"Reciprocal Tariffs" to Take Effect Wednesday
The U.S. is set to impose new "reciprocal" tariffs on Wednesday—dubbed "Liberation Day" by Trump—though the exact scope remains unclear. Economists estimate the average tariff rate could reach 15%.
Trump signaled on Sunday that the measures would not be limited to nations with the largest trade imbalances, further rattling markets. "You’d start with all countries," he told reporters aboard Air Force One.
The White House projects the tariffs will generate an additional $100 billion in government revenue. However, analysts warn the move risks exacerbating global economic headwinds.
European markets also felt the pressure, with the UK’s FTSE 100 down 0.9%, Germany’s DAX falling 1.3%, and France’s CAC 40 declining 1.6%.
"A selling wave is sweeping across global markets," said Jochen Stanzl, chief market analyst at CMC Markets. "The tariffs imposed by the U.S. government and the fear of new announcements are creating a bleak atmosphere on trading floors worldwide."
Recession Fears Mount as Goldman Sachs Adjusts Forecast
Goldman Sachs raised its 12-month U.S. recession probability estimate to 35%, up from 20%, warning of potential further stock market declines. Analysts cautioned that a typical recession could drive the S&P 500 down by an additional 17% from current levels.
When asked about recession risks, Trump said, "I hate to predict things like that," but acknowledged a "period of transition" due to the scale of his trade policies.
The proposed tariffs surpass those enacted during Trump’s first term, including existing 20% duties on Chinese imports and threatened 25% levies on goods from Canada and Mexico. The administration has also vowed to match tariffs imposed by the EU, India, and Japan on U.S. exports.
As markets brace for Wednesday’s announcement, volatility is expected to persist, with investors closely watching for further developments.