Following his warning that foreign governments would need to pay “a lot of money” to remove the taxes he referred to as “medicine,” US President Donald Trump’s expansive tariff proposals rocked international financial markets Monday.
As investors anticipated that Trump’s duties announcement last week would result in higher prices, weaker demand, and possibly a global recession, Asian equity markets fell, European equities fell to a 16-month low, and oil prices fell. China’s government fund intervened to try to stabilize the market after mainland and Hong Kong equities plummeted on Monday.
European Union ministers, who have differing opinions on how hard to retaliate against Trump without endangering their own businesses and customers, will meet on Monday in an effort to present a unified front.
Goldman Sachs and other investment banks revised their projection, increasing the likelihood of a US recession to 45% in the upcoming year. From an initial projection of 1.3% growth in gross domestic product, JPMorgan economists now predict that tariffs are causing the US economy to fall by 0.3%.
They fear that there will be a recession both domestically and internationally, which could result in a depression. Trump told reporters on board Air Force One on Sunday that he was unconcerned by losses that had depleted global stock markets of trillions of dollars.
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