Markets on Edge as Trump Announces Tariffs on Key Trade Partners

U.S. President Trump escalated the global trade tension this week with sweeping tariff announcements targeting its major trade partners. The move has rattle the financial markets, reinforced the safe-haven demand and raised concerns over the global inflation and supply chain stability.

Broad Tariff Measures Announced

On Sunday, U.S. President Donald Trump signed an executive order imposing new 30% tariffs on most imports from the European Union and Mexico, meanwhile, Canada also slapped with a 35% tariffs, effective August 1. The surprise move followed the collapse of last-minute trade negotiations and marks a sharp departure from earlier signs of compromise.

Simultaneously, Trump confirmed a 50% tariff on all imports from Brazil, citing “persistent currency manipulation and unfair commodity dumping.” The U.S. will also begin enforcing a 50% tariff on copper imports as announced earlier last week—a significant escalation that could affect global manufacturing costs and inflation expectations.

“We will not stand by while foreign powers undermine American workers and industries,” Trump said in a statement from the White House.

In addition, the Trump administration is also warning multiple trade partners—including Japan and South Korea—with a potential of 15-20% blanket tariffs.

Market Reaction: Risk-Off Mood May Resurfaces

Global markets reacted sharply to the announcement on the Monday’s opening.

U.S. stock futures dropped early Monday, while European and Asian equities opened lower across the board. Meanwhile Gold, rallied to three-week high near $3,370 on opening, reflecting renewed risk aversion sentiment could bolster the safe-haven asset.

XAUUSD, 2-H Chart Analysis | Source: Ultima Market MT5

“Gold bullish momentum could test on the $3,340 – $3,360 key levels, a sustained hold above these levels could signal a fresh upside extension,” said Ultima Market Technical Analyst.

The risk-off tone may deepen if further retaliation or countermeasures are announced by U.S. trade partners later this week. Investors are also closely monitoring inflation data and central bank responses, which may amplify volatility across global markets.

What to Watch Next

Markets are now bracing for further escalation ahead of the August 1 implementation date, with the following developments in focus:

• U.S. Trade Representative (USTR) formal notices to affected countries and further tariff notice from Trump administration on other major trade partners like Japan and South Korea.
• Potential EU and key trade partners retaliation or diplomacy talks, particularly from Brazil and Canada.
• U.S. Consumer Price Index, where tariff could amplify inflation concerns.

With new tariffs now targeting the EU, Canada, Mexico, Brazil, and others, the trade conflict has significantly widened. However, Trump’s strategy appears to follow an “escalate-to-negotiate” approach—using aggressive tariff threats to force trade concessions.

For now, markets are expected to remain cautious amid growing concerns over broader economic spillovers. Rising consumer costs, disrupted supply chains, and inflationary pressure—particularly in sectors like electronics and auto manufacturing, which are sensitive to copper tariffs—may weigh on global sentiment in the near term.

Disclaimer

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