Stocks in Europe weakened, whereas the value of gold – a safe-haven asset – reached a brand new peak after US President Donald Trump threatened tariffs on European allies till a deal was reached for the US buy of Greenland.
In the United States, the place markets are closed Monday, Dow futures had been 0.9% down, whereas S&P 500 futures dropped by a steeper 1.2%.
The US president announced Saturday that he would impose a ten% tariff from February 1 on items from eight European countries. Trump didn’t specify whether or not the tariff can be on prime of what they’re already paying.
In response, the European Union is contemplating imposing €93 billion ($108 billion) of beforehand introduced retaliatory tariffs in opposition to the United States. French President Emmanuel Macron has additionally reportedly known as for the activation of the EU’s so-called anti-coercion instrument. Colloquially generally known as a “trade bazooka,” the instrument may block a few of America’s entry to EU markets or end in export controls, amongst different potential measures.
“Given their deep economic and financial ties, both the US and Europe have the ability to impose significant pain on each other, but only at great cost to themselves,” Jonas Goltermann, a senior markets economist at consultancy Capital Economics, mentioned in a word Monday.
“As such, the more likely outcome, in our view, is that both sides recognise that a major escalation would be a lose-lose proposition, and that compromise eventually prevails. That would be in line with the pattern around most previous Trump-driven diplomatic dramas.”