A sea of red could be seen across key European and US indexes on Wednesday afternoon as US President Donald Trump’s new tariffs came into effect, including total import levies of 104% on Chinese goods. US Customs and Border Protection confirmed that it was preparing to collect country-specific tariffs from 86 nations. In retaliation on Wednesday afternoon, China also announced a 84% tariff on US goods, up from 34%.
While President Trump indicated he remained open to negotiations with some countries, he confirmed that the planned tariffs on Chinese imports would proceed. He signed an executive order tripling tariffs on low-value Chinese goods to 90%, effective from 2 May.
Trump stated that he was making “tailored deals” with certain nations, as some Asian countries and the European Union were open to discussions.
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As of around 15:00pm CEST, the Euro STOXX 50 was down 4.1%, the broader STOXX 600 fell 4.4%, while France’s CAC 40 declined 4.2%.
Germany’s DAX dropped around 4.2%, and London’s FTSE 100 declined 2.9%. In Italy, the FTSE MIB dropped 3.9% and Spain’s IBEX 35 lost 3.4%.
European car companies were also in negative territory with Volkswagen AG shares falling 2.6%, Mercedes-Benz Group AG down 4.1%, and Ferrari N.V. losing 2.3%.
Equity markets across Asia also resumed their declines, with Japan’s Nikkei 225 slumping 3.9%, Australia’s ASX 200 losing 1.8%, and South Korea’s Kospi down 1.7% at market close. Hong Kong’s Hang Seng Index bucked the trend, closing up 0.7%.
In China, the People’s Bank of China (PBOC) weakened the Yuan fixing against the US dollar for a fifth consecutive session. The USD/CNY pair rose to 7.35, a level not seen since September 2023. However, analysts expect the central bank to weaken the Yuan gradually to avoid disorderly movements that could trigger capital outflows.
South Korea unveiled a US$2 billion emergency package to support its carmakers, warning that Trump’s 25% tariffs on automobiles would deliver “a significant blow” to the critical sector.
India’s Nifty 50, meanwhile, was down 0.6% at market close after the Reserve Bank of India (RBI) cut its benchmark rate for the second time in a row to 6% and shifted its policy stance to accommodative.
New Zealand’s stock market also outperformed the broader region, down just 0.7%. The Reserve Bank of New Zealand (RBNZ) lowered its official cash rate for the fifth consecutive meeting to 3.5%, signalling further rate cuts ahead as it confronts downside risks to growth and inflation stemming from the US tariffs.
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