Trump Tariffs Hit Hard: Stocks Plunge, Crypto Market Sheds $450 Billion
US stock market futures fell sharply early Monday, as increasing trade tensions driven by surprise Donald Trump tariffs that sent shockwaves across global financial markets.
The Nasdaq 100 futures fell 2.7%, while the entire US equities panorama also fell sharply. This comes amid increased investor concern about the economic consequences of Trump’s decision to escalate trade tensions.
Also read: Tether Reports Record $13 Billion Profits in 2024 Amid Growing US Treasury Holdings
According to Finviz data, the Russell 2000 index, which measures small-cap US stocks, plummeted by 3.2%, the S&P 500 fell by 2%, and Dow Jones Industrial Average futures fell by around 1.5%. This rapid decline comes as investors analyze Trump’s surprise decision to put a 25% tax on imports from Canada and Mexico and a 10% tariff on Chinese goods, which will take effect tomorrow, Feb. 4.
Analysts Predict a Volatile Week Ahead After Trump Tariffs
George Saravelos, Head of FX Research at Deutsche Bank said, “The market needs to structurally and significantly reprice the trade war risk premium with the announcements at the weekend roughly three times larger than what was envisaged.”
Also read: Bitcoin ETF Inflows: Bitwise CIO Forecasts $50B Surge in US
Tobin Marcus, Head of US Policy and Politics at Wolfe Research, added to the pessimistic attitude, and said, “Markets may now need to take the rest of Trump’s tariff agenda literally, rather than just seriously.” If this new degree of severity is suddenly priced in, Monday may be a difficult day for markets.
Apart from the United States, Asian and European markets are also badly impacted. The Nikkei 225 in Japan fell 2.1%. Similarly, the Stoxx Europe 600 fell 1.8% on fears of a worldwide economic downturn.
Crypto Market Loses $450 Billion in Just 24 Hours
The global crypto market is experiencing a downturn as well, with almost $450 billion wiped out in the last 24 hours. According to CoinGecko, the overall crypto market cap has dropped to $3.12 trillion, the lowest level since mid-November.
Also read: 21Shares Files for Spot Polkadot ETF Amid Growing Crypto ETF Interest
However, Trump’s trade war could send Bitcoin prices “violently higher” in the long term due to a weakening dollar and lower yields on US government securities, according to Jeff Park, head of alpha strategies at Bitwise.
Economists are raising concerns about the tariffs’ economic impact. Supply chains are under further strain, which have already been stressed by previous trade disputes and pandemic-related interruptions. Higher import costs are projected to affect industries such as automotive, technology, and agriculture, resulting in higher consumer pricing and worse profit margins.
The market is preparing for a difficult week and investors should keep an eye out for new developments. Upcoming events include probable responses from affected countries, with China, Canada, and Mexico, expected to announce additional retaliatory measures in coming days.
