Global stocks recovered slightly on Tuesday, stabilizing after the turmoil caused by the Trump administration’s recent tariff announcements. Most major European and Asian indexes climbed, and premarket trading in the United States appeared cautiously optimistic, even as America’s trade war with China deepened. President Trump threatened higher tariffs on Chinese goods if Beijing did not reverse its 34% reciprocal tariffs.
In response, China’s Commerce Ministry declared it would “fight to the end” if Trump’s additional tariffs were enacted. In U.S. premarket trading, the S&P 500, Nasdaq, and Dow Jones Industrial Average all edged up between 1% and 2%. This followed a wild trading day on Monday, which left investors grappling with the impact of Trump’s aggressive tariffs.
Stocks in Europe rose, with the Stoxx 600 up 1.4% after shedding 4.5% on Monday. Major indexes in the United Kingdom, Germany, France, and Italy rallied between 1.5% and 2%, echoing similar gains in Asia. In Asia, major indexes in mainland China, Hong Kong, and South Korea climbed between 1% and 3%, while Japan’s Nikkei 225 index jumped 6% after severe losses on Monday triggered automatic circuit-breakers.
Japan’s confirmation that it has designated a Cabinet member for trade talks with the Trump administration may have contributed to these increases.
Stocks stabilize amid trade tensions
However, the administration’s trade policies unsettled the U.S. business community.
Political leaders worldwide reacted with a mix of bafflement and fury to the new U.S. trade policy and its impact on financial markets. European Commission President Ursula von der Leyen stated that the European Union offered Trump a “zero for zero” tariff deal, which was rejected. “These tariffs come first and foremost at immense costs for US consumers and businesses.
But they also have a massive impact on the global economy,” she said. “Nonetheless, we stand ready to negotiate with the US because Europe is always ready for a good deal.”
Defense, aerospace, and heavy industry stocks in Europe rallied Tuesday after their significant declines on Monday. These sectors have been volatile due to the tariffs but are also boosted by Europe’s push for self-reliance in defense.
Trump showed no intention of pausing his tariffs and threatened that the new 50% duty on China would bring total U.S. tariffs up to 104%, effective Wednesday if Beijing did not withdraw its tariffs on all U.S. goods. Adding to the strained relations, Vice President JD Vance’s remarks in an interview exacerbated tensions. He remarked that America “borrows money from Chinese peasants to buy the things those Chinese peasants manufacture,” comments that a Chinese Foreign Ministry spokesperson criticized.
Despite these tensions and market volatility, Trump remained unfazed, stating, “I don’t mind going through it because I see a beautiful picture at the end,” implying his belief that tariffs would ultimately benefit the U.S. economy.
Image Credits: Photo by Teng Yuhong on Unsplash
