World markets are already experiencing tremors as Donald Trump prepares to take office, threatening to impose steep tariffs on imports from China, Canada, Mexico and other nations. The potential impact on trade flows, costs, and global economies is causing widespread concern.
From China to Europe , Canada to Mexico, world markets are already reeling from Donald Trump’s promise to jack up tariffs when he becomes U.S. president in less than two weeks. Trump has pledged tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products, duties that trade experts say would upend trade flows, raise costs and draw retaliation. The scale and scope remains to be seen, but the road ahead is bumpy.
Here’s a look at some markets in focus right now.“China is likely to be the primary target of the Trump trade wars 2.0,” say Goldman Sachs. Investors are already getting ahead, forcing the country’s stock exchanges and central bank to defend a tumbling yuan and stocks. China’s tightly controlled currency is at its weakest in 16 months, with the dollar trading decisively above the symbolic 7.3 yuan milestone which authorities had defended. Barclays sees the yuan at 7.5 per dollar by end-2025, and sliding to 8.4 in a scenario in which the U.S. imposes 60% tariffs. Even without tariffs, the currency has been hurt by a weak economy pushing down Chinese government bond yields -- widening the gap with elevated U.S. Treasury yields. Analysts expect China to let the yuan weaken further to help exporters manage the impact of tariffs, but gradually. A sudden plunge would bring lurking fears of capital outflows to the fore, and jolt confidence, already bruised after stocks just saw their biggest weekly fall in two years.EURO’S TOXIC MIX The euro has slid over 5% since the U.S. election, the most among major currencies, to two-year lows around $1.03. JPMorgan and Rabobank reckon the single currency could fall to the key $1 mark this year, as tariff uncertainty weighs. The U.S. is the European Union’s most important trading partner, with $1.7 trillion in two-way goods and services trade
TRADE WAR TARIFFS CHINA EUROPE GLOBAL MARKETS
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