Stock markets react to Trump's latest tariff threats against EU and Mexico

CBS News

11 hours ago

European markets mostly fell Monday as investors digested President Trump's latest trade war salvos, which saw him threaten to hit the European Union and Mexico with 30% tariffs starting on August 1. Mr. Trump's threat came after a series of announcements last week that included warnings of a possible 50% levy on all copper imports and all goods from Brazil, 35% levies on Canadian goods, and a possible 200% tariff on imported pharmaceuticals.
In announcing his latest intentions on Saturday, Mr. Trump cited Mexico's role in illicit drugs flowing into the United States and a trade imbalance with the European Union.
The move threw months of painstaking talks with Brussels into disarray.
European Commission chief Ursula von der Leyen has insisted the EU still wants to reach an accord with the U.S. On Sunday, the bloc delayed its planned retaliation for separate U.S. duties on steel and aluminum. EU officials had threatened in May to impose tariffs on U.S. goods worth around $117 billion, including cars and planes, if talks fail, from July 14.
Von der Leyen said Sunday that Mr. Trump's letter showed "that we have until the first of August" to negotiate.
"We have always been clear that we prefer a negotiated solution," von der Leyen said, adding: "We will continue to prepare countermeasures so we are fully prepared."
In April, Mr. Trump imposed tariffs on dozens of countries, quickly pausing them for three months to negotiate deals. As that 90 day period ended this week, Mr. Trump started sending tariff letters to leaders, but he pushed back the date of implementation of the threatened levies until August, The Associated Press reported.
The EU's trade chief, Maroš Šefčovič, said he planned to speak with his U.S. counterparts on Monday.
"I'm absolutely 100% sure that a negotiated solution is much better than the tension which we might have after the 1st of August," Šefčovič told journalists in Brussels. "I cannot imagine walking away without genuine effort. Having said that, the current uncertainty caused by unjustified tariffs cannot persist indefinitely and therefore we must prepare for all outcomes, including, if necessary, well-considered proportionate countermeasures to restore the balance in our transit static relationship."
He noted that the EU was also "doubling down on efforts to open new markets" beyond the United States.
French President Emmanuel Macron backed efforts to reach an agreement that "reflects the respect that trade partners such as the European Union and the United States owe each other," but he urged the bloc to "step up the preparation of credible countermeasures" in the event the two sides fail to reach an agreement.
Shares fell in Frankfurt and Paris, though London saw prices tick higher.
In Asia, Hong Kong, Shanghai, Seoul, Singapore, Manila, Bangkok and Jakarta all rose, while Tokyo, Sydney, Taipei, Mumbai and Wellington edged down.
Bitcoin hit a new record high of $123,205.
"It is hard to say whether the muted market response over the week is best characterised by resilience or complacency," National Australia Bank's Taylor Nugent said. "But it is difficult to price the array of headlines purportedly defining where tariffs will sit from 1 August when negotiations are ongoing."
Data showed Chinese exports jumped more than expected in June after Washington and Beijing agreed a tentative deal to lower levies on each other. That included a 32.4% surge in shipments to the U.S., which had dropped in May.
Traders were also keeping a nervous eye on the Federal Reserve as Mr. Trump continued to berate boss Jerome Powell for not cutting interest rates soon enough, saying Sunday "I hope he quits," and "he should quit."