The sell-off that began on Thursday has intensified, wiping trillions of dollars from global share prices, after US president Donald Trump announced new tariffs.
Bloomberg have calculated that around $9.5tn (£7.39tn) has been wiped off global share prices since the US announced new trade levies.
“The escalation in tariffs is bad for US companies who buy goods from China, and vice versa, because their costs will go up. It’s also bad for the world in general as we now have a repeat of the heightened geopolitical tensions between the US and China which dominated Trump’s first term in office,” said Dan Coatsworth, investment analyst at AJ Bell.
“The rapid pullback in stocks and shares over the past few days has put a dent in people’s investments, including those in the US who were meant to have benefited from Trump’s actions. Instead, his tactics have caused shockwaves in every corner of the world,” he added.
The FTSE 100 index plunged more than 5% within the first 10 minutes of trading on Monday. London’s blue-chip index is now down 4.5%, or 359 points lower, at 7,695 points at the time of writing. That would be its lowest closing level in a year, just five weeks after it hit a record high over 8,900 points. If it closes with losses above 5%, it will be one of the worst 20 sessions for the index.
Neil Birrell, chief investment officer at Premier Miton Investors, said: "Markets are in a mess and are likely to stay that way for now. We are in a phase that anything within equities which held up well through the end of last week is getting hit today. The volatility in currencies and commodities is making sure that there is no hiding place other than bonds, and even then, credit spreads are a concern.
"There are few signs of capitulation yet and nothing positive coming on the tariff front to allay worse fears of their impact on the global economy. Although, it changes by the hour and some sort of bounce may not be far off given the scale of the equity market falls."
Goldman Sachs has revised its 2025 US growth forecast downward, reducing it from 1% to 0.5% due to concerns that Trump may raise tariffs far beyond earlier expectations. In a note titled “US Daily: Countdown to Recession,” Goldman also raised its 12-month recession probability from 35% to 45%, citing “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty” following Trump’s tariff announcements.
Despite the turmoil, Trump has remained defiant, telling reporters late last night: “I don’t want anything to go down. But sometimes you have to take medicine to fix something.”
He added: “We have been treated so badly by other countries because we had stupid leadership that allowed this to happen. They took our businesses, they took our money, they took our jobs.”
Trump dug in on his so-called “reciprocal tariffs,” insisting he would not back down unless other countries balanced their trade with the US.
“I said, ‘We’re not going to have deficits with your country,’” Trump said. “We’re not going to do that, because, to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
Trump on his social media.
Jamie Dimon, CEO of JPMorgan (JPM), has warned that Trump’s new tariffs will harm growth and increase prices for consumers. In his annual letter to shareholders, Dimon said: "The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession. And even with the recent decline in market values, prices remain relatively high. These significant and somewhat unprecedented forces cause us to remain very cautious."
Asian stock markets from Shanghai to Tokyo and Sydney to Hong Kong saw sharp declines on Monday, with losses not seen in decades. The Shanghai Composite (000001.SS) closed 7.3% lower, while Taiwan’s Weighted Index (^TWII) plummeted 9.7%, marking its largest drop on record. The ASX 200 (^AXJO) in Australia lost 4.2%, and the Kospi (^KS11) in South Korea ended 5.6% lower. The Hang Seng (^HSI) in Hong Kong closed at 13.2%, its biggest drop since 2008 while Japan's Nikkei (^N225) fell 7.8%.
The tariffs are set to hit Asia’s manufacturing hubs particularly hard, especially those that rely on the US as a key market for exports ranging from clothing to cars. Wealthy allies like Japan and South Korea face 26% tariffs, while developing countries like Vietnam, brace for a 46% levy.
Trump called Vietnam one of the "worst offenders" for trade practices. Countries like Cambodia, Thailand, and China will face even steeper tariffs, with China hit by a total of 54%. Singapore, New Zealand, and Australia have had a baseline 10% tariff imposed.
"Asia is bearing the brunt of the US tariff hike. While there could be some room for negotiation, a new regime of higher tariffs is here to stay," said Qian Wang, Asia Pacific chief economist at investment firm Vanguard.
European markets also suffered significant drops in early trading, with banks and defence firms seeing the biggest losses. The DAX (^GDAXI) in Germany dropped 4.6%, while the CAC 40 (^FCHI) fell 5% into the red.
Meanwhile, in the US, Wall Street’s “fear index” has surged, reaching its highest level since August, when markets were rattled by fears of a US recession. The VIX index (^VIX), which tracks market volatility, has nearly doubled today to around 60 points. The S&P 500 is teetering on the edge of a bear market, where sustained declines in stock prices typically trigger sell-offs, raising alarm for both investors and the broader economy.
Futures tied to the S&P 500 (ES=F) fell 2.7%, while those on the tech-heavy Nasdaq 100 (NQ=F) retreated 3%. Dow Jones Industrial Average futures (YM=F) dropped 2.4%, or around 800 points.
The US began imposing a baseline 10% tariff on imports on Sunday, with higher duties of between 11% and 50% set to take effect on Wednesday. The higher tariffs are set to hit both US rivals and allies alike.
