Heavy losses on the stock market - "This is the worst-case scenario": Trump's wave of tariffs is shaking up the markets

Heavy losses on the stock market - "This is the worst-case scenario": Trump's wave of tariffs is shaking up the markets FOCUS-online editor Clemens Schömann-Finck • 3 hours • 3 minutes reading time Donald Trump has unleashed a wave of tariffs There was a small hope that US President Donald Trump was not serious about his tariff threats. This hope has evaporated. Now things are getting uncomfortable. US President Donald Trump has made good on his threat and imposed far-reaching tariffs on goods from Canada, Mexico and China. Tariffs of ten percent will be levied on imports from China and 25 percent on imports from neighboring countries Mexico and Canada. A rate of ten percent will apply to energy imports from Canada. The three countries immediately announced countermeasures. The announcement shocked the markets: The euro fell to $1.0141 on Monday night, its lowest level since November 2022, due to concerns about an escalating trade dispute between the US and other countries. The euro recently recovered somewhat, but at $1.0245 it still cost a good cent less than on Friday evening. The DAX started almost two percent in the red and lost 450 points at the start. Car manufacturers were particularly hit, losing around five percent. Trump has already announced that the EU will also have to expect tariffs. "I don't have a timetable, but it will be very soon," Trump said in Washington on Sunday. The yuan, the Mexican peso and the Canadian dollar also depreciated significantly against the US dollar. The Canadian dollar even fell to its lowest level in 22 years. Bitcoin lost up to six percent of its value on the Asian markets on Monday afternoon (local time). The second most important currency, Ether, fell by up to 26.5 percent. "We are seeing a general collapse of cryptocurrencies, the markets are switching to risk-averse mode," explained Stephen Innes, analyst at SPI Asset Management. "Market participants are getting rid of speculative assets." According to this, the main aim is to offset the impending losses in other areas that are likely to get into trouble after the introduction of US punitive tariffs. Worse than feared The call for tariffs dominated Donald Trump's election campaign. But commentators had hoped that there was a lot of noise and that Trump only wanted to create a threatening backdrop for negotiations. This hope does not seem to have been fulfilled: "What we are seeing right now is the worst-case scenario," wrote George Saravelos of Deutsche Bank in an analysis. The tariffs were imposed extremely quickly, without any major discussions. It is not clear what the countries could do to change Trump's mind. "There are no criteria for de-escalation and the hardliners in the US government appear to have the upper hand." Saravelos points out that Trump apparently does not take into account rising costs for citizens. This has also been seen as a possible counterargument to tariffs that are too harsh. The USA is itself a major oil producer, but imports from Canada are still important. Canadian oil has special properties that mean that US industry cannot easily replace it. Now companies have to pay more for it, and this also threatens to increase prices. The tariff on Canadian oil is only supposed to be ten percent. But the fact that it affects energy imports at all is seen as a bad sign. Cars in the USA are also likely to become significantly more expensive due to the tariffs on Mexican imports. There is talk of up to $3,000. After all, Mexico is also an important location for the American auto industry, the "workbench of the USA". Trump seems to be aware of the consequences for the American economy and is still willing to accept it: "Will there be pain? Yes, maybe (and maybe not!)," he wrote on Truth Social. But the move will make America great again, "and that will be worth the price that has to be paid for it." What will happen next on the stock market Whether the stock market crash on Monday marks the beginning of a period of losses on the markets will depend on various factors, such as whether and to what extent the countries affected introduce counter-tariffs. In addition, not all companies are affected equally by the tariffs. But more important will be how much the tariffs cause prices in the USA to rise. On the one hand, higher prices could slow Americans' willingness to buy and thus put a strain on economic growth. On the other hand, they could bring the US Federal Reserve into action. If inflation picks up again as a result of the tariffs, the Fed could tighten its monetary policy again. Even interest rate hikes would then be possible - something the stock market does not like at all.