Global Stock Market Turmoil: The Impact of Trump’s Tariff Policy Today, we will discuss a crucial topic that could impact not only Asia but the global economy—the potential U.S. tariffs and the looming recession threat.
Stock Markets in Turmoil
As April 2 approaches, major stock markets across the world are experiencing a sharp decline. The economies of Japan, China, and South Korea have been hit hard.
- Japan’s stock market fell over 4%
- South Korea’s market saw a decline of more than 3%
- The Hang Seng Index also dropped significantly
- The U.S. stock market continues its downward trend
Since the Indian stock market was closed today, its impact will be seen on April 1 when the markets open.
Trump’s Tariff Policy and Its Impact
Former U.S. President Donald Trump has declared April 2 as “Liberation Day,” stating that it will mark the day America frees itself from trade restrictions by imposing tariffs on all countries.
- Trump has made it clear that these reciprocal tariffs will target every country, including India.
- The India-U.S. trade deal is still under negotiation and may be finalized by mid-2025.
- Japan, China, and even India are likely to face the negative impact of these tariffs.
Will This Lead to a Global Recession?
According to Goldman Sachs, the chances of a U.S. recession have now reached 35%, and this percentage is steadily rising. Many top financial executives in the U.S. predict that a recession will hit before the end of 2025.
What Happens When a Recession Hits?
A recession occurs when GDP growth remains negative for two consecutive quarters (six months). The U.S. has experienced multiple recessions in history:
- 2020: During the COVID-19 pandemic, the S&P 500 fell 34%
- 2007: The market crashed 57% due to the financial crisis
- 2001: The stock market dropped 37%
On average, whenever a U.S. recession occurs, its stock market falls by 31%, dragging down stock markets worldwide.
Geopolitical Tensions Adding to Market Uncertainty
Apart from trade policies, growing tensions between the U.S. and Iran are further shaking global markets. Trump has recently threatened heavy bombings on Iran, leading to Iran preparing its missile launch systems in response.
As a result, investors are pulling out money from stocks and investing in gold, pushing gold prices to an all-time high of over $3,100 per ounce.
How Will This Affect India?
Despite short-term instability, India’s long-term growth story remains strong. Many U.S. investment banks believe that:
- Initially, India’s stock market and GDP may face some setbacks.
- However, in the long run, India is expected to outperform most economies.
- Unlike many nations, India has already started trade negotiations with the U.S., which might help soften the impact of tariffs.
What Should Investors Do?
With such high market volatility, it’s crucial to remain cautious. Avoid high-risk investments until the global situation stabilizes.
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Which country is planning to develop the world’s first fusion-based hybrid nuclear reactor by 2031?
A) India
B) China
C) Japan
D) USA
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