The actions of the United States are at their lowest level, because President Donald Trump swore two weeks ago, and other global financial markets fell after having ordered prices In Canada, Mexico and China, while world leaders have responded to its threats to also widen prices to the European Union.
The S&P 500 benchmark dropped 1.7% on Monday opening in the heels of the biggest daily losses of the year on a series of Asian and European scholarships to fear an economically damaging trade war.
Trump said his prices on the three largest American trade partners, who were to take effect on Tuesday, could cause short-term American pains, but “in the long term, the United States has been scammed by practically all countries of the world “.
Later Monday, Trump said that he would arouse new prices on Mexico for a month after Mexico agreed to strengthen its border with the United States with 10,000 National Guard officers to stem the flow of illegal drugs , especially fentanyl.
Mexican president Claudia Sheinbaum said that the agreement also includes an American commitment to act to prevent the trafficking in high -power weapons in Mexico. The two leaders spoke by phone on Monday, just a few hours before the American prices on Mexico, China and Canada take effect.
The two countries will use one month’s break to initiate new negotiations, said Trump.
Speaking in Washington, DC, Sunday after his return from his Mar-A-Lago domain in Florida, Trump said that the EU at 27 nations would be the next in the shooting line but did not say when.
“They don’t take our cars. They do not take our agricultural products. They take almost nothing and we take everything, “he told journalists.
EU leaders meeting at an informal summit in Brussels on Monday said that Europe would be ready to retaliate if the United States imposed prices but also called for reason and negotiations.
Trump suggested that Great Britain, who left the EU in 2020, could be spared prices, saying: “I think we can be developed.”
The United States is the largest commercial and investment partner in the EU. According to Eurostat data from 2023, the United States had a deficit of 155.8 billion euros (161.6 billion dollars) with the EU in the goods trade, compensated by a surplus of 104 Billion euros (107.6 billion dollars) in services.
The head of the EU foreign policy, Kaja Kallas, said that there were no winners in a trade war and, if one had broken up between Europe and the United States, “then Whoever laughs on the side is China. “
The markets vanish
Trump said on Monday that he spoke to Canadian Prime Minister Justin Trudeau and that it would be again at 3 p.m. (8:00 p.m. GMT).
Canada and Mexico had announced reprisal rates in the United States.
Economists have said that the Republican President’s plan to impose 25% prices in Canada and Mexico and that 10% prices in China would slow world growth and increase American prices.
The fear is that these prices will increase the prices of the grocery store, electronics and all kinds of other items for American households, exerting upward pressure on an American inflation rate which has slowed in large part since Its peak almost three years ago. Stubborn inflation or accelerated could prevent the American federal reserve from reducing interest rates, which it started to do in September to give a boost to the national economy.
Trump argued that prices are necessary to curb immigration and drug trafficking and stimulating national industries.
The financial market reaction reflected concerns on Monday concerning the fallout from a trade war. Tokyo’s shares ended the day down almost 3% and the reference of Australia – often a proxy trade for Chinese markets – dropped by 1.8%. The Chinese continent market was closed for the new year lunar holidays.
Around lunchtime in Europe, the Dax index of Germany fell 1.8%, the French CAC dropped by 1.9% and the FTSE 100 of Great Britain down 1.5 %.
The Chinese yuan, the Canadian dollar and the Mexican peso have all collapsed against a dollar arrow. With Canada and Mexico, the main sources of US import oil imports, US oil prices have jumped by more than 1%, while petrol term contracts increased by almost 3%.
Trump prices will cover almost half of all American imports and force the United States to more than double its own manufacturing production to fill the gap – a short -term impracticable task, analysts of ingenants wrote.
Other analysts have said that prices could throw Canada and Mexico into the recession and trigger “stagflation” – high inflation, stagnant growth and high unemployment – at home.
In Europe, Deutsche Bank economists said they are currently taking a 0.5% stroke of gross domestic product (GDP) if Trump imposed 10% prices on the EU.
National emergency
An information sheet of the White House has not given any details on what Canada, Mexico and China should do to win a stay.
Trump promised to maintain the sanctions in place until he described as a national emergency on fentanyl, a deadly opioid and illegal immigration to the United States.
China has called the fentanyl america problem and said it would challenge the World Organization for the World Trade Organization and take other countermeasures, but also left the door open for talks.
Canada said it would take legal action under the international organizations concerned to challenge the prices.
Car manufacturers would be particularly affected by new prices on vehicles built in Canada and Mexico in charge of a large regional supply chain in which the parts can cross the borders several times before the final assembly. Ford and General Motors’ shares fell 4% to 5%.
The actions of Volkswagen, Porsche, Stellantis and Daimler Truck all dropped from around 5% to 6% in European trade on Monday.
Analysts of the investment bank Stifel estimated that 8 billion euros ($ 8.2 billion) of VW income would be affected by prices and 16 billion euros ($ 16.5 billion) in Stellantis .
