Tokyo/Washington (Reuters) -World financial markets plunged again on Monday after Donald Trump’s warning to the United States business partners, called to pay “a lot of money” if they wish to obtain the vast customs duties decided by Washington, which the American president presents as a “drug”.
In Paris, the CAC 40 abandons almost 6% at the start of the session, heading for its strongest decrease daily since March 2020 and the emergence of the Cavid-19 pandemic.
The Parisian index had already lost 3.3% Thursday, after the announcement of “reciprocal” customs duties by the Trump administration and 4.26% Friday following reprisals decided by China.
The STOXX 600 pan -European index drops 5.93% and the term contracts on the New York Stock Exchange indices, which foreshadow the trend in the opening of Wall Street, show a decline of around 4% to 5%.
In Asia, the equity markets experienced their worst day on Monday in more than 16 years. The MSCI index bringing together the region’s stock markets in 8.9%plunged, its strongest withdrawn since October 2008 and the global financial crisis.
The Taiwan Stock Exchange index fell 9.7%, its highest drop never recorded in one session.
Investors fear that Donald Trump’s commercial policy will trigger prices, a drop in demand, a blockage of investments and, in the end, causes a global recession.
Speaking to journalists on Sunday, Donald Trump said he was not concerned about the plot of the financial markets around the world while thousands of billions of dollars in market capitalization have evaporated since the announcement of his massive customs duties.
“I don’t want anything to dive. But sometimes you have to take medication to correct something,” he said on the Air Force One presidential plane bringing him back to Washington after a golf weekend in Florida.
The American president said that he had been maintained during the weekend with leaders of Europe and Asia, who hope to convince the head of the White House to review the so-called “reciprocal” taxes.
“They come to the table. They want to chat, but there will be no discussion unless they pay us a lot of money on an annual basis,” said Donald Trump.
Expected response from the EU
Since Saturday, American customs services have taken taxes of 10% – the minimum threshold set Wednesday by Donald Trump – on imports from many countries. Reciprocal customs duties, ranging from 11% to 50% depending on the country, should come into force on Wednesday at 4:01 GMT.
Several governments have expressed their wish to dialogue with the United States to avoid this cleaver.
According to US Treasury Secretary, Scott Bessent, more than 50 countries have started negotiations with Washington since the American president’s announcement on the vast customs surcharges on Wednesday.
The European Union, targeted by “reciprocal” customs duties up to 20%, has promised to retaliate. The Bloc’s foreign trade ministers meet in Luxembourg on Monday to reflect on possible measures.
The executive vice-president of the European Commission in charge of industrial strategy, Stéphane Séjourné, did not rule out coercion measures as a withdrawal from US European public procurement companies on Monday.
A vote of the twenty-seven is scheduled for Wednesday on the response to American customs duties already imposed on steel and aluminum.
China, which announced on Friday 34% customs duties on imports from the United States, denounced on Monday “unilateral and typical protectionist intimidation”, by the voice of the spokesperson for the Ministry of Foreign Affairs, Lin Jian.
Japan, one of the main allies of the United States in Asia, is one of the countries hoping to be able to seal an agreement in one form or another with Washington. Japanese Prime Minister Shigeru Ishiba warned on Monday that results would not come overnight “.
While the Japanese leader spoke in front of the Parliament, the Nikkei fell to a lower since October 2023, under the effect of the withdrawal of the bank titles which lost almost a quarter of their market value in the last three sessions.
Risk of recession
JPMorgan economists now expect customs taxes to decline 0.3% of the annual gross domestic product (GDP) of the United States, against a previous forecast of +1.3%. They also anticipate an increase in the unemployment rate at 5.3% against 4.2%.
Some are betting on the fact that the increased risk of recession can push the American Federal Reserve (Fed) to reduce its interest rates in May.
Billionaire Bill Ackman, who had supported Donald Trump’s candidacy for the American presidential election last November, said Trump was losing the confidence of business leaders on Sunday, warning of an “economic nuclear winter” if the White House chief did not suspend this trade war.
(Leika Kihara in Tokyo, Trevor Hunnicutt aboard Air Force One, Jarrett Renshaw, Daphe Psaledakis, Steve Holland, Douglas Gillison, Ted Hesson, Kanishka Singh and Susan Heavey in Washington, Tom Westbrook in Singapore, Ben Blanchard in Taipei, Khanh Guarascio in Hanoi; Jean Terzian and Blandine Hénault)
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