President Donald Trump’s initiation of a trade war through imposing tariffs on Canada, Mexico, and China has sent global markets into tumult. Stock futures in the U.S. dipped significantly, with Nasdaq futures down 2.35% and S&P 500 futures 1.8% lower. In response, Canada and Mexico announced plans for retaliatory tariffs, with China also vowing to take countermeasures. The uncertainty surrounding the tariffs has caused distress in markets already rattled by the emergence of China’s DeepSeek AI model last week.

The impact of the tariffs remains uncertain as the White House has not provided all the details yet. Analysts are speculating on potential outcomes, with concerns about lower U.S. corporate profits, increased inflation, and currency weaknesses. Trump’s tariffs, which include 25% on Mexican and most Canadian imports and 10% on Chinese goods, could have far-reaching consequences on global trade and economic stability.

Financial markets are bracing for a selloff in stocks and other high-risk assets if the tariffs persist for an extended period. The euro has already slid, and currencies like the Mexican peso and Chinese yuan have weakened. The potential for higher inflation and interest rates in the U.S. due to the tariffs could impact the Federal Reserve’s rate-cutting strategies, affecting investor sentiment and market dynamics. Overall, the tariffs have injected a new level of uncertainty and volatility into the global economy, prompting investors and analysts to closely monitor developments and brace for potential repercussions.