The latest round of tariffs signed by former President Donald Trump has sent shockwaves through global markets. The order confirms a 25% tariff on imports from Mexico and Canada, with the exception of a 10% tariff on Canadian energy products. Additionally, China faces a 10% increase on top of existing levies, escalating trade tensions further.

Retaliation Begins

Canada has already announced countermeasures in response to the tariffs, while Mexico is expected to reveal its own retaliatory actions later today. Meanwhile, China has signaled its intent to challenge the tariffs at the World Trade Organization (WTO), setting the stage for another trade dispute on the global stage.

Market Reaction

The European stock markets tumbled as investors reacted to the latest trade war developments. The Russell 2000 (RTY) underperformed, reflecting concerns about economic fallout. On the currency front, the U.S. dollar surged, while bonds saw gains following the announcement. The Japanese yen benefited from its safe-haven appeal, while the euro weakened, with EUR/USD trading around the 1.02 level.

Commodities in Focus

Crude oil prices firmed up despite the tariff turmoil, while precious metals remained subdued. However, base metals took a hit, weighed down by both the tariffs and a weaker-than-expected Chinese PMI report.

What’s Ahead?

Investors will be closely watching upcoming economic events and earnings reports, including:

• US ISM Manufacturing Data – Key insights into economic activity.
• Federal Reserve’s SLOOS Report – A closer look at lending conditions.
• OPEC+ JMMC Meeting – Potential oil market shifts.
• Federal Reserve Speakers – Fed’s Bostic & Musalem could offer guidance on monetary policy.
• Treasury Financing Estimates – Implications for fiscal policy.
• Earnings Reports – Key updates from Tyson Foods and Palantir.

With heightened market volatility, global economic uncertainty, and trade tensions rising, investors are bracing for further developments that could shape the financial landscape in the coming days. Stay tuned.