Global stock markets fell sharply after Donald Trump approved new tariffs on China, Canada, and Mexico, fueling fears of a trade conflict. However, losses eased when Trump agreed to postpone tariffs on Mexican goods for a month.
His decision unsettled investors, leading to a wave of selling. The S&P 500 initially dropped nearly 2% before recovering slightly after the U.S. and Mexico announced a temporary pause. By mid-afternoon, the S&P 500 was down 0.4%, while the Nasdaq fell 0.8%. The Dow Jones managed to inch into positive territory.
London’s FTSE 100 slipped 1.4% from its recent record high before regaining some ground. Germany’s DAX, France’s CAC 40, and Spain’s IBEX all lost over 1%, while Italy’s FTSE MIB declined 0.7%.
Asian markets also suffered. Japan’s Nikkei tumbled 2.8%, and Hong Kong’s Hang Seng index fell 1%. Meanwhile, Chinese markets remained closed for the Lunar New Year holiday.
Nvidia, the U.S. tech giant, dropped more than 5% after Chinese AI firm DeepSeek gained momentum. European carmakers, including Volkswagen, BMW, and Porsche, saw their shares decline between 5% and 6%.
Several UK firms also struggled. Scottish Mortgage Investment Trust, JD Sports Fashion, and miner Antofagasta all fell by over 4%. The British pound weakened against the U.S. dollar but rose slightly against the euro. The Canadian dollar hit a 20-year low before recovering some losses.
Ontario’s Premier Doug Ford responded by banning U.S. firms from provincial contracts, warning that American businesses would lose billions. Cryptocurrency markets also slumped, with Bitcoin dropping 6.2% to a three-week low before rebounding slightly.
Analysts remain wary. JPMorgan Chase cautioned that Trump’s policies could harm businesses. Experts also warned that tariffs might fuel inflation and slow global economic growth, including in the U.S.