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Global Markets React to Trump’s Escalating Trade Policies

President Trump’s tariffs and trade war rhetoric have triggered market corrections, strained alliances, and stoked fears of economic downturns.

U.S. President Donald Trump holds an executive order about tariffs increase, flanked by U.S. Commerce Secretary Howard Lutnick, in the Oval Office of the White House in Washington, D.C., U.S., February 13, 2025. REUTERS/File Photo
Parts of wine wooden boxes are seen at a wine dealer shop as President Donald Trump threatened a 200% tariff on European wine, Champagne and spirits if the European Union goes forward with a planned tariff on American whiskey, Thursday, March 13, 2025 in Ville d'Avray, outside Paris. (AP Photo/Christophe Ena)
A protester stands near the Department of Education headquarters after the agency said it would lay off nearly half its staff, in Washington, DC, on March 12.
A man walks near the meeting room at the Manoir Richelieu before the G7 Foreign Ministers summit in La Malbaie, Quebec, Canada March 12, 2025. REUTERS/Mathieu Belanger

Overview

  • The S&P 500 has entered correction territory, falling 10% below its February peak, with the ASX 200 and other global indices also experiencing significant declines.
  • Trump’s trade policies, including tariffs on steel, aluminum, and European goods, have led to retaliatory measures from key allies like Canada, Mexico, and the European Union.
  • Economic experts warn that prolonged trade conflicts could increase recession risks and further destabilize global markets, with investors shifting to safer assets like gold and European equities.
  • Trump’s rhetoric has strained U.S. relationships with allies, including threats to Canada’s sovereignty and criticism of NATO, while maintaining a conciliatory stance toward adversaries like Russia.
  • Australian consumers and superannuation funds are feeling indirect impacts from market volatility, though exports to the U.S. remain relatively unaffected by current tariffs.