Tariffs and retaliatory measures unsettle the global markets

The global financial market kicked off a new trading month with steep losses due to a broader global selloff as investors weighed new U.S. tariffs on goods from key trade partners and their potential impact on the economy and corporate profits.

U.S. President Donald Trump initially signed an order to impose 25% tariffs on imports from Mexico and Canada, as well as a 10% duty on China, which were set to come into effect on February 04. The U.S. does about $1.6 trillion in business with the three countries.

However, stocks have managed to rebound from Monday’s selloff, which came after Trump announced a 30-day pause on tariffs on Mexico, and Canada. The pauses came after both countries agreed to take steps toward preventing the trafficking of opioid fentanyl into the U.S.

The Chinese government slapped tariffs of up to 15% on U.S. imports of coal and liquefied natural gas and 10% higher duties on crude oil, farm equipment and selected cars, effective Feb. 10.

At the same time, China announced that export controls would be implemented on tungsten, tellurium, bismuth, molybdenum, and indium-related materials. The move was a response to Trump’s decision to impose duties of 10% on Chinese imports, starting Tuesday, February 04.

On the cryptocurrencies front, the digital assets tumbled at the beginning of the month in a risk-off move following Trump’s tariffs, with Bitcoin plunging as low as $91,200 before stabilized to near $96,000.

Bitcoin saw $377.6 million in long liquidations in a 24-hour period on Monday, according to CoinGlass, while Ether, which dropped as low as $2,110, before rose above $2,700, saw $479 million in long liquidations in the same period.

Brent crude oil prices fell sharply toward the $74/b level as traders gauged the potential for severe disruption to global economic activity due to the tit-for-tat tariffs between the US and China.

The big winner of the recent market turmoil is the Gold, which hit a fresh record high of $2,882/oz on strong demand for safety, as the bullion is traditionally considered a hedge against both inflation and geopolitical uncertainty.

Conclusion:

Global stocks, cryptos, crude oil, and risk-sensitive assets have initially experienced a broad-based selloff at the beginning of February, as the U.S. tariffs on China ignited fears of a global trade war and significantly eroded risk sentiment, while gold prices rose in anticipation of higher inflation arising from the tariffs, and safe-haven demand.

Risk Warning: Trading involves risk.

This article is for informational purposes only and does not constitute investment advice or a recommendation.