New york: Six months into his second term, US President Donald Trump has returned to the global stage with a familiar weapon: tariffs. From China to Mexico to the EU, Trump has reignited trade tensions with a barrage of new levies, fulfilling campaign promises but causing great uncertainty in financial markets and global supply chains.
According to Anadolu Agency, Trump's renewed focus on his protectionist economic policy has caused sharp reactions in the global markets, affecting commodity prices, precious metals, and oil. Trump first introduced his "reciprocal" tariffs in April, imposing blanket tariffs between 10% to 50% on most countries. He suspended those tariffs for 90 days, except for China, on April 9. After a series of negotiations, Washington and Beijing agreed to a trade deal in London last month, easing some punitive tariffs and other restrictive measures.
Multiple countries have been negotiating for better trade agreements, including lower tariff rates than those introduced in April by the US. The United States announced new trade deals with the UK, Vietnam, and Indonesia. Additionally, Trump sent letters to various countries, notifying them of tariff rates effective from August 1, with the EU and Mexico facing 30%, and Canada at 35%. New sectoral tariffs include a 25% tariff for automotive imports in April and hefty levies on copper and pharma products starting August 1.
During the first months of Trump's second term, the New York Stock Exchange faced significant volatility. The Dow Jones Industrial Average saw an 11.5% fall, though it later stabilized at around 44,340 points by late July, marking a 0.72% rise over six months. The S and P 500 dropped 18% but recovered to 6,296 points, up 4% in the same period. The Nasdaq initially fell 24% but rebounded by 5.76%, with Nvidia leading gains. The VIX volatility index surged by 66.6% before settling at 16.4 as tariff fears eased.
Currency markets also experienced fluctuations, with the US dollar index dropping 10% to around 98.50, while the euro rose 13% to $1.16. In the commodities market, gold prices soared by 24% amid uncertainty, reaching historic highs. Conversely, Brent crude oil prices fell by 14.3%, partly due to concerns over reduced global trade activity.
Bitcoin experienced initial volatility but eventually surpassed the $120,000 threshold in July, following trade deal announcements and regulatory optimism. In the tech sector, Tesla shares fell 22% amid market uncertainty and Elon Musk's departure from Trump's circle. Apple, Google, and Amazon also faced declines, albeit less severe. Conversely, Nvidia's stock climbed by 22.4% due to growing demand for AI technologies, making it the first publicly traded company to reach a $4 trillion market value. Microsoft and Meta shares also rose, benefitting from easing market fears.