Stock indexes fell sharply on April 3, while safe-haven assets such as safe-haven bonds and gold rose as investors worried that new U.S. tariffs would escalate a trade war that threatens to plunge the world into recession.
Points of attention
- Trump's tariffs have the potential to trigger a global recession, affecting economies worldwide.
- Ukraine is bracing for the impact by reinstating tariffs on American goods, albeit at lower rates compared to other countries.
- Despite the challenges, Ukraine's Economy Minister is optimistic about negotiating more favorable trade terms with the U.S.
Trump's tariffs will lead to a recession in the global economy
The dollar fell to a six-month low after US President Donald Trump imposed tariffs that raised import taxes to the highest level in a century.
"This is a turning point not only for the US economy but also for the global economy," said Olu Sonola, head of US economic research at Fitch Ratings.
He said many countries are likely to fall into recession. If this tariff rate remains unchanged for a long period, most of the forecasts can be thrown out.
Apple's market cap fell by more than $240 billion as its shares fell 7% in after-hours trading. Nvidia's market cap fell 5.6%, or $153 billion.
The yield on 10-year U.S. Treasury bonds fell more than 15 basis points to a five-month low of 4.04%, with markets pricing in a higher probability of interest rate cuts, even as the tariffs are likely to lead to a sharp rise in U.S. inflation.
Oil, a gauge of economic activity, fell more than 2%, with Brent crude futures hitting $73.3 a barrel.
Gold hit a record high above $3,200 an ounce, while the Japanese yen jumped more than 1% to 147.3 per dollar as currency traders sought safe havens outside the U.S. dollar. The euro rose 0.6% to $1.0912.
As for Ukraine, Economy Minister Yulia Svyrydenko believes that it will be difficult, but not critical.
A general duty of 10% will apply to us. There is no separate higher duty, such as Moldova's 31% or the EU's 20%, for Ukraine. How much did we export to the US in 2024? $874 million, of which $363 million was for cast iron and another $112 million for pipes. In return, we bought goods worth $3.4 billion from the US.
Yulia Svyrydenko
Minister of Economy of Ukraine
Ukrainian tariffs on American goods are quite low — 10% on cars, 0% on coal and oil. Therefore, Svyrydenko says, we have a chance to agree on other terms now.
If everything remains as it is, the American universal tariff will hit mainly small producers. That is why we are already working to ensure better conditions for Ukraine.
