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Stocks drop, dollar rallies as Year of the Snake starts with bite

HONG KONG, China — Stock markets in Asia and Europe sank and the dollar surged Monday after Donald Trump signed off huge tariffs on China, Canada and Mexico, and warned the European Union would be hit "pretty soon".

Less than two weeks after moving back into the White House, the US president on Saturday made good on warnings that he would resume his hardball tactics, sparking fears of trade wars that could hammer the global economy.

The move will see 25 percent levies on imports from Canada and Mexico and 10 percent duties on Chinese goods.

Analysts at Oxford Economics said the tariffs could see Mexican inflation surge to six percent annually, from 4.2 percent in December, while the peso sank seven percent.

Chief EY economist Gregory Daco said Canada's economy could shrink 2.7 percent this year and 4.3 percent next year.

White House Press Secretary Karoline Leavitt said tariffs were "promises made and promises kept by the president".

Canada said it would file a World Trade Organization claim against the United States, while Mexican President Claudia Sheinbaum announced that retaliatory tariffs would be imposed on US products.

China's trade ministry said Beijing would take "corresponding countermeasures".

While the decision had been well-flagged, equity markets took a hefty hit, with all three main indexes on Wall Street turning negative at the end of Friday trade.

In Asia, the Year of the Snake started with a nasty bite.

Tokyo, Seoul and Jakarta each shed more than two percent while Sydney, Bangkok and Wellington were each off more than one percent. Singapore and India also fell, while Hong Kong gave up early deep losses to end only marginally down. Shanghai remained closed for a holiday.

London opened more than one percent lower, while Paris and Frankfurt each lost more than two percent.

Taipei plunged more than three percent, with chip titan and market-heavyweight TSMC diving 5.7 percent on the first day of trade since China's DeepSeek unveiled a cheaper artificial intelligence model rivalling those of US tech giants.

"This wasn't a shock -- it's been telegraphed for weeks -- but investors will still feel the jolt as markets adjust to a move almost universally

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