Trump's Tariffs Spark Global Market Turmoil, Crypto Bloodbath

European markets experienced a volatile week as U.S. President Donald Trump's tariff announcements sent shockwaves across global markets. U.S. stock futures plummeted, with Dow futures dropping 1.2%, S&P 500 futures tumbling 1.9%, and Nasdaq futures plunging 2.7%. The news triggered massive crypto liquidations, with over $1 billion wiped out in a single day. Bitcoin and Ethereum prices fell by 5% and 10% respectively, while Dogecoin and XRP dropped by 19% each.

Crypto markets, trading 24/7, served as early indicators of broader market sentiment. The decline across futures markets and crypto suggested traders expected significant turbulence when U.S. markets opened on Monday. The upheaval preceded a crucial earnings week, with over 120 S&P 500 companies reporting results. Market observers warned that sustained trade tensions could significantly impact corporate profits and growth expectations for the year ahead.

Trump's announcement of 25% tariffs on Mexican and Canadian goods and 10% levies on Chinese imports, set to take effect on Monday at 12:01 a.m. EST, sparked concerns about prolonged higher interest rates. The recent tariffs are likely to lead to increased inflation, which could dampen investor sentiment in crypto. Market reaction reflected concerns that tariffs could force the Federal Reserve to maintain higher rates throughout 2025, impacting borrowing across major markets and leading to a risk-off appetite, particularly for crypto.

Trading partners announced swift retaliation. Canada imposed matching 25% tariffs on $155 billion of U.S. goods, while Mexico promised countermeasures and China plans a World Trade Organization lawsuit. U.S. dollar figures surged in early Asian trading hours, pushing the Canadian dollar to its weakest in nine years and the euro to its lowest since November 2022, according to IMF data.

U.S. companies with significant international exposure face particular pressure. Technology and consumer discretionary sectors, heavily dependent on global supply chains, show increased vulnerability in pre-market trading. While caution is warranted, some believe the market reaction is overblown, and the trade tension may diffuse sooner than expected.