Tariff Shock Hits Stocks as Trump Targets Europe

Global Markets Slide as Trump’s Europe Tariff Threats Ignite Trade War Fears, Gold Hits Record

Global financial markets came under heavy selling pressure on Monday after U.S.President Donald Trump threatened new tariffs on several European countries, reigniting fears of a widening trade conflict and sending investors rushing into safe-haven assets.

U.S. stock futures led global equities lower, while gold and silver surged to record highs as traders reduced risk exposure following Trump’s weekend announcement linking tariffs to negotiations over Greenland.

“President Trump’s actions have reignited geopolitical risks and brought trade uncertainty back to the forefront,” said Kyle Rodda, senior financial market analyst at Capital.com.

E-mini S&P 500 futures fell around 1%, Hong Kong’s Hang Seng Index dropped about 1%, and Europe’s STOXX 600 slid more than 1% in early trading. U.S. cash markets were closed for the Martin Luther King Jr. holiday.

Safe Havens Rally as Risk Assets Sell Off

Gold futures climbed above $4,670 an ounce for the first time on record, while silver surged past $94 an ounce to a new all-time high. Germany’s 10-year government bond yield, the euro zone benchmark, fell about two basis points as investors piled into sovereign debt.

Trump Targets Eight European Countries

On Saturday, Trump said the United States would impose 10% tariffs on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland starting February 1. He added that the tariff rate would rise to 25% on June 1 unless a deal is reached for the “complete and total purchase of Greenland,” according to a post on Truth Social.

European officials are reportedly preparing countermeasures that could include up to €93 billion in tariffs on U.S. goods or restrictions on American companies’ access to European markets.

Escalation Risks Cloud Global Outlook

The eight countries targeted by Trump accounted for about $350 billion in U.S. imports in 2024. Holger Schmieding, chief economist at Berenberg, said a 10% tariff could lift U.S. consumer prices by as much as 0.15%.

“Trump’s threat puts the entire U.S.-EU trade framework at risk,” Schmieding said. “If this escalates further, the damage to U.S. consumers could be nearly three times as severe.”

Europe May Deploy Anti-Coercion Measures

Analysts say the European Union could respond by activating its Anti-Coercion Instrument, a legal framework designed to counter economic pressure from foreign governments.

“That could mean retaliatory tariffs — potentially against U.S. Big Tech — as well as investment restrictions,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “That helps explain why Nasdaq futures are under heavier pressure than the broader market.”

Precious Metals Remain in a Strong Bull Trend

Strategists said the renewed trade tensions strengthen the bullish case for gold and silver.

“With geopolitical and trade uncertainty rising again, investors are naturally moving to hedge risk, which further supports precious metals,” said Michael Brown, senior research strategist at Pepperstone.

Markets Expect Familiar Negotiation Tactics

Some analysts cautioned that markets may be seeing a familiar pattern.

“This looks like another ‘escalate to de-escalate’ strategy that ultimately ends in a deal, though not without significant volatility along the way,” said strategists at Evercore ISI.

Trump is expected to meet European leaders at the World Economic Forum in Davos this week, while markets also await a U.S. Supreme Court ruling on the legality of his use of emergency powers to impose tariffs.

Defense Stocks Outperform

European defense stocks bucked the broader market decline, with shares of Rheinmetall, BAE Systems, and Thales all trading higher on expectations of higher regional defense spending.