In a series of announcements early Tuesday 4 march, US President Donald Trump revealed the imposition of additional tariffs on imports from Canada, Mexico, and China, alongside a freeze on military aid to Ukraine. This news sent shockwaves through global markets, triggering significant losses.
On the trading day, the French CAC 40 index dropped by 1.85%, closing at 8,048 points, while the German DAX plunged by 3.54%. The previous day, Wall Street also ended in the red, with the S&P 500 falling by 1.76%, the Dow Jones industrials dropping 1.48%, and the Nasdaq, heavily weighted with tech stocks, losing 2.64%.
The market downturn may continue, as Trump has promised further tariff hikes, this time targeting agricultural goods, set to take effect on April 2. This uncertainty has fueled concerns among investors about a potential slowdown in global economic growth. In fact, the US is already facing signs of a downturn, with the Federal Reserve Bank of Atlanta’s latest forecast predicting a contraction of 2.8% in GDP growth for the first quarter.
As the trade war intensifies and the Federal Reserve maintains its tightening stance on monetary policy, investors are becoming increasingly cautious. A growing number of fund managers are hedging against the risks of escalating trade tensions, with 90% of them believing that US stocks are overvalued.
