Stock Markets Plummet following Trump's imposition of Fresh Tariffs on multiple Nations
In August 2021, US President Donald Trump imposed tariffs on numerous trading partners, causing a ripple effect in global financial markets. The tariffs, which varied by country and product category, targeted countries including Japan, South Korea, Brazil, Canada, Russia, the EU, Mexico, Vietnam, and BRICS-aligned countries.
The new tariffs range from 10 to 41 percent, with some countries facing up to 50 percent and others threatened with 100 percent tariffs, such as Russia. By August 1, 2021, the tariffs included a 30 percent reciprocal tariff on the European Union and Mexico, down from an earlier proposed 50 percent rate for the EU.
The US also delayed some reciprocal tariffs until August 1 while demanding trade deals from partner countries. For example, a 20 percent tariff baseline on goods from Vietnam was accompanied by a 40 percent tariff threat on transshipments. Threatened tariffs of 35 percent on Canada and 50 percent on Brazil were also effective from August 1. A new trade deal with South Korea resulted in a lowered 15 percent tariff, down from 25 percent earlier in the year.
These tariff threats and impositions created uncertainty in global financial markets, contributing to volatility, as investors reacted to escalating trade tensions between the US and multiple key economies. The tariffs raised the cost of imports, and affected countries introduced retaliatory measures, which disrupted some supply chains and affected multinational companies' earnings forecasts, impacting market sentiment negatively.
On the domestic front, the US economy added only 73,000 jobs in July, according to the US Labor Department, a figure that was revised lower from the May and June jobs data. This slow job growth was a concern for investors, with Kathleen Brooks, research director at XTB trading group, stating that the US payrolls data is dominating markets.
The stock market also felt the impact of these developments. On Friday, US stocks experienced significant losses: the Dow Jones Industrial Average dropped 1.46 percent, the S&P 500 fell 1.8 percent, and the Nasdaq decreased 2.42 percent. The Dow Jones index dropped more than 1.2 percent after trading began in New York. Europe's STOXX 600 also tumbled, falling more than two percent.
In summary, President Trump's August 2021 tariffs were broad and significant, targeting many US trading partners with varying rates up to 100 percent, leading to increased global trade tensions and stock market volatility in affected sectors. The tariffs remain the main factor affecting global financial markets.
- The tariffs imposed by US President Donald Trump in August 2021, ranging from 10 to 100 percent, have disrupted various industries, including finance, due to the volatility in global financial markets caused by the escalating trade tensions with multiple key economies.
- The impact of these tariffs on multinational companies' earnings forecasts, negative market sentiment, and subsequent stock market declines in the US and Europe, suggests a strong link between politics and business, with trade policies playing a significant role in the general-news landscape.
