Trump's Global Trade War is Now Officially Taking Place and the Market is Crashing

President Donald Trump has officially launched a global trade war, causing market chaos and wiping out billions of dollars overnight. On Tuesday, the United States imposed heavy tariffs on goods imported from Mexico, Canada, and China, with Trump confirming that no further negotiations will take place. The numbers are brutal: 25% for all goods from Mexico, 25% for most things from Canada except energy, 10% for Canada's energy imports, and 20% for many goods from China. Canada immediately responded with a 25% tariff on $155 billion worth of U.S. exports.

Global stock market plunges as Trump's tariffs officially take effect Data from CNBC shows that Asian tech stocks plunged right after the news. Nvidia fell 9%, while Japanese chip giant Advantest plummeted to its lowest level since October, dropping 9%. Renesas Electronics lost 6.35%. South Korean SK Hynix fell by 3.26%. In China, Alibaba dropped by 2.23%, Kingsoft Cloud decreased by 8.46%, and electric vehicle stocks like BYD lost 6.60%, according to data. SoftBank, the Japanese investment giant, has dropped 6.25%. Masayoshi Son, the company's CEO, is said to be planning to borrow $16 billion to invest in AI, but that news is not enough to stop the decline. Taiwan Semiconductor Manufacturing Company (TSMC) also dropped 2% after Trump said the company will spend $100 billion in the U.S. to boost chip production.

The S&P 500 is also being destroyed as it witnesses the worst drop since December 18, fluctuating on the 200-day moving average, a key support level. If the index drops lower, expect more blood in the market. Bitcoin is also feeling the heat. The price dropped below $90,000, erasing a 10% increase after Trump announced the US Cryptocurrency Reserve. Oil prices fell sharply as traders fled to find safe havens. In contrast, gold is surging—up 10% since January, while Bitcoin is down 10% YTD. Oh, but the European market handles things a bit differently. The Stoxx 600, representing a broad view of European stocks, actually outperformed the S&P 500 in February, according to CNBC. The reason is that investors are pouring money into defense stocks, expecting Trump's policies to continue to negatively impact the market. Cryptocurrency collapses after 36 hours of sharp fluctuations By the way, cryptocurrency investors are facing a worse situation. On Sunday evening, Trump announced that the US will launch a cryptocurrency reserve fund AND that news caused the cryptocurrency price to soar, with the market capitalization surging from $2.7 trillion to $3.1 trillion in just a few hours. However, that party did not last. By Monday night, the reality had taken place. The market flipped, and within just 24 hours, the cryptocurrency lost 500 billion dollars. Currently, it is down 100 billion dollars from the level before Trump's announcement. Ethereum, has recovered from 2,173 dollars to 2,550 dollars, now at 2,002 dollars—down 8% from the level before the announcement.

Before the news of Trump's Reserve, the Crypto Fear & Greed Index was at 20 (Extreme Fear). After the announcement, this index surged to 55 (Greed). Now? Back to 24, meaning fear is back in control. Meanwhile, institutional investors have withdrawn funds quickly. In the last week of February, cryptocurrency funds saw a record withdrawal of 2.6 billion dollars, the largest to date, exceeding the previous record in 2024 by 500 million dollars. Bitcoin dropped 3% from the pre-reserve announcement level, wiping out 250 billion dollars of market capitalization in just 12 hours.

A survey by the US Bank shows that 42% of investors currently consider trade war as the biggest threat to risk assets by 2025, up from 30% in January. Only 3% of investors believe that Bitcoin will be the best-performing asset in a comprehensive trade war - much lower than the US dollar 15% or gold 58%. Meanwhile, Goldman Sachs' panic index, at 1.4 in December, has soared to 9.1 and is approaching 10 today. This means that prices will be even more volatile in the future. The actual tariffs of the United States are currently at their highest level since the Great Recession. And it's not over yet. Next is the 25% tariff on the European Union.