Global financial markets plunged on Monday following U.S. President Donald Trump’s latest sweeping tariff threats, rattling investors and stoking fears of a global economic downturn. Trump’s remarks over the weekend, warning foreign governments they must “pay a lot of money” to avoid the levies — which he described as “medicine” — triggered a wave of uncertainty across the globe.
Asian markets were among the first to react, with shares in Taiwan plummeting nearly 10%, marking the largest single-day loss on record. Japan’s Nikkei index fell to an 18-month low, led by heavy losses in the banking sector. The market volatility quickly spread to Europe, where stocks dropped to a 16-month low. European defense companies, previously buoyed by anticipated spending increases, suffered their steepest losses since the onset of the COVID-19 pandemic.
In mainland China and Hong Kong, stock markets tumbled sharply before Beijing’s sovereign wealth fund intervened in an effort to stabilize the sell-off. Oil prices also fell sharply amid concerns over weakening demand.
The panic follows Trump’s plan to impose tariffs as high as 50% on a wide range of foreign goods, a move economists say could stifle global trade, hike prices, and push the U.S. and other economies toward recession. Analysts at Goldman Sachs raised the probability of a U.S. recession to 45% within the next year, while JPMorgan revised its GDP growth forecast from 1.3% to a 0.3% contraction.
“People are afraid the worst is yet to come,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. “They’re worried about a domestic recession turning into a global depression.”
Speaking to reporters aboard Air Force One on Sunday, Trump dismissed concerns about the market fallout, claiming the tariffs are necessary. “Sometimes you have to take medicine to fix something,” he said, adding that negotiations would only occur if other nations agreed to annual payments to the U.S.
China condemned the move as “economic bullying” and introduced retaliatory tariffs, while leaders across Europe scrambled to respond. EU ministers met Monday to consider forming a united front, though concerns remain about escalating the conflict and further harming European exporters.
While some countries signaled interest in dialogue — including Taiwan, India, and Vietnam — others expressed frustration. Dutch Trade Minister Reinette Klever stressed the urgency of opening talks with Washington, warning of growing economic fallout.
Meanwhile, billionaire investor Bill Ackman urged the White House to pause the tariffs, warning of an impending “economic nuclear winter.”
As investors increasingly price in a potential recession, speculation is mounting that the U.S. Federal Reserve may cut interest rates as soon as next month — although Fed Chair Jerome Powell has thus far shown no rush to act.
With global confidence shaken, leaders and markets alike are bracing for what could be a turbulent economic period ahead.
