Global Stock Markets Dive as US Tariffs Spark Fears of Trade War

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Trump put a 25% tariff on goods from Canada and Mexico, and China got hit with a 20% tariff. Canada and China quickly fired back with their own taxes on US goods, and Mexico said they've got plans, making people worry about a full-on trade war.

In the US, the stock markets dropped, and all the big indexes went down. The FTSE 100 in the UK also fell on Tuesday, and Asian markets weren't doing great either.

Some experts are saying these tariffs might make prices go up for Americans, which could affect things everywhere, even in the UK. Brian Cornell, the CEO of Target, said people should expect to pay more, especially for things like strawberries, avocados, and bananas.

Countries Fight Back

Trump said the tariffs were a response to illegal drugs and immigrants coming into the US. But Canadian Prime Minister Justin Trudeau fired back, saying Canada is responsible for less than 1% of fentanyl entering the US. He vowed to hit back with 25% tariffs on $150 billion worth of US goods.

China wasted no time either. They announced tariffs on US agricultural products like wheat, corn, and soybeans. China is the top buyer of these US products, so this could hurt the US farming industry.

In Mexico, President Claudia Sheinbaum said the country has plans in place. She stayed calm, reassuring people that Mexico had Plan A, B, C, and D.

Stock Market Reactions

The Dow Jones dropped 1.5% on Monday, and the S&P 500 lost 1.8%. On Tuesday, Japan’s Nikkei 225 fell by 1.2%, and Hong Kong's Hang Seng dropped 0.3%. European markets, including Germany and France, also saw losses.

Trump says the tariffs are meant to bring jobs back to the US and boost manufacturing. But economists warn that these taxes could end up hurting businesses and consumers, raising prices for everyday items.

Global Trade at Risk

Global trade is in danger. US, Canada, and Mexico have deep economic ties, with goods worth about $2 billion crossing their borders every day. These tariffs could raise prices for consumers as companies pass on the costs. And if imports drop, fewer products would be available, which could push prices up even more.

Andrew Wilson from the International Chamber of Commerce said these tariffs are the biggest increase since the 1940s and warned that the global economy is at risk.

Price Increases Are Coming

Get ready to pay more for things like cars and avocados. Cars could cost up to $3,000 more because parts cross the US, Canadian, and Mexican borders multiple times before getting assembled. Avocados might cost more too, since Mexico supplies almost all of the US avocado market.

Even maple syrup might get more expensive. Canada makes 75% of the world’s syrup. Ella Hoxha from Newton Investment Management said consumers will likely see price hikes soon as companies pass on the added costs.

Chris Torrens from the British Chamber of Commerce in China said the UK is also feeling the effects. If the US and Europe don’t get along, UK businesses could face problems. But he’s hopeful that the UK and China could form a better relationship moving forward.