Global stock markets fluctuated on Tuesday as investors speculated on potential trade policy changes under US President Donald Trump. Despite pledging aggressive tariffs during his campaign, Trump refrained from imposing new import taxes on his first day in office, though he hinted that tariffs on Mexico and Canada could be introduced as early as February 1.
Markets in the US and Europe opened slightly higher, with Asia seeing modest gains. The dollar, which fell after Trump’s inauguration, regained ground against major currencies such as the euro and the pound.
Trade Tensions Loom
Trump’s remarks in the Oval Office signaled that tariffs remain on his agenda, particularly targeting Mexico and Canada. He criticized both nations for allegedly allowing illegal immigration and drug trafficking into the US. “We’re thinking in terms of 25% on Mexico and Canada,” he stated.
The president also linked potential tariffs on China to the ongoing negotiations over TikTok’s future. Trump warned that if Beijing obstructed an agreement, it could be viewed as a “hostile act.”
In a presidential memorandum, Trump directed federal agencies to investigate the US trade deficit and alleged unfair trade practices, including currency manipulation. He also reiterated his campaign pledge to create an “External Revenue Service” to manage tariffs and duties from foreign trade.
Market Reactions
US markets opened positively, with the S&P 500, Dow, and Nasdaq recording gains after the Martin Luther King Jr. holiday closure. European markets, including London’s FTSE 100 and Paris’s CAC 40, showed slight increases in afternoon trading.
However, some sectors faced setbacks. Danish wind energy firm Ørsted saw its shares plummet by 17% after announcing a $1.7 billion impairment charge related to US project delays. Trump’s statement about ending leasing to wind farms added to the company’s woes.
In the currency market, the Mexican peso and Canadian dollar fell sharply following Trump’s tariff comments. Oil prices dipped on the prospect of increased supply, while Bitcoin rose amid Trump’s support for cryptocurrencies.
Expert Concerns
Analysts expressed concerns about market volatility under the new administration. Fiona Cincotta, senior market analyst at City Index, noted that discussions about tariffs on Canada and Mexico had already dented market sentiment.
Charu Chanana, chief investment strategist at Saxo Bank, warned that Trump’s return to the White House would reintroduce unpredictability, stating, “Markets should brace for volatility.”
Judy Shelton, a Trump adviser, defended the president’s plans, emphasizing his commitment to revitalizing the private sector through tax cuts, deregulation, and trade measures. Shelton argued that tariffs could incentivize Americans to purchase domestically produced goods, minimizing inflationary pressures.
As investors await further details, markets are likely to remain sensitive to Trump’s evolving trade agenda.
