The euro reached a nearly five-month high against the US dollar after President Donald Trump announced sweeping reciprocal tariffs, leading to a broad decline in the greenback. Global markets reacted sharply to the news, with stock indices plummeting and bond yields dropping amid growing economic uncertainty.

Following Trump’s announcement on Wednesday night, the euro rose 0.5% against the dollar, reaching 1.0915 at 5:17 am, close to its five-month peak of 1.0953. The surge nearly erased losses suffered since Trump’s re-election on November 5. The US president stated that his administration would impose a minimum 10% tariff on all countries, with additional higher levies targeting key trading partners. China, the European Union, and Vietnam topped the list of affected nations, facing tariffs of 34%, 20%, and 46%, respectively. China’s import duties will rise to 54% when combined with existing blanket tariffs.

The US dollar weakened significantly against major currencies, including the euro, Japanese yen, British pound, and Swiss franc, as investors feared economic repercussions. The yield on 10-year US Treasury bonds fell to its lowest level since October 2024, reflecting expectations of a slowdown. Meanwhile, commodity-linked currencies, such as the Australian and Canadian dollars, declined against the US dollar, as falling crude oil and copper prices weighed on their performance.

Global Markets Tumble

The tariff announcement triggered a broad sell-off in global equities, with stock markets across Asia experiencing significant losses on Thursday. Japan’s Nikkei 225 dropped nearly 3%, China’s Hang Seng Index slid 1.5%, while Australia’s ASX 200 and South Korea’s Kospi declined by 1% each. The selloff extended to mining stocks, with Australia’s BHP falling 2.4% and Rio Tinto dropping 2.8%. Weaker copper prices also pressured European equities, particularly those tied to the commodities sector.

Market analyst Josh Gilbert of eToro noted that while Australia has minimal direct trade exposure to the US, the broader impact on China and other Asian economies could weigh heavily on Australia’s export-driven market. The economic fallout could intensify if global demand slows and commodity prices continue to decline.

In the US, stock futures pointed to a sharp downturn, with the Dow Jones Industrial Average losing 2.01%, the S&P 500 falling 2.78%, and the Nasdaq dropping 3.3% in pre-market trading. European markets were also set to open lower, with Germany’s DAX futures down 1.89% as of 5:30 am CET. Tech stocks, particularly the “Magnificent Seven,” suffered heavy losses in after-hours trading, with Tesla down 4.5%, Apple losing 2.3%, and Nvidia declining 2.4%. Analysts warned that companies with significant exposure to China, such as Apple, could face further pressure in the coming weeks.

Gold Reaches Record High Amid Economic Uncertainty

The heightened risk-off sentiment sent gold prices soaring to a new all-time high, as investors sought safe-haven assets. Gold futures surged to $3,195 per ounce on COMEX, while spot gold touched $3,167 before slightly retreating.

Kyle Rodda, a senior market analyst at Capital.com, warned that uncertainties surrounding Trump’s trade policies could drive further demand for gold. “There was no clear indication that the Trump administration will stop here with ‘trade wars.’ That could mean further uncertainty,” Rodda said.

Gold has been one of the top-performing asset classes, rising 20% this year following a 30% surge in 2024. Factors such as increased central bank purchases, concerns over US dollar depreciation, and investor hedging strategies have contributed to gold’s sustained rally.

As markets brace for further volatility, traders remain cautious, with attention focused on potential retaliatory measures from affected trading partners and the broader implications for global trade.

Tesla’s global sales fell by 13% in the first quarter of 2024, marking a significant decline for the electric vehicle giant as it struggles to maintain its market dominance. The drop in sales comes despite aggressive price cuts and promotional incentives, raising concerns about the company’s future performance.

Tesla reported 336,681 deliveries between January and March, down from 387,000 in the same period last year. Analysts had projected sales of around 408,000, making the shortfall even more pronounced. The disappointing figures signal potential trouble ahead for Tesla’s first-quarter earnings report, set to be released later this month.

Weak Demand and Market Challenges

Several factors are contributing to Tesla’s declining sales, including an aging vehicle lineup, increasing competition from rival automakers, and a shifting consumer sentiment. The company’s bestselling Model Y is reportedly due for an upgrade later this year, causing some buyers to hold off on purchases.

Market analysts also point to Tesla’s brand perception as a growing issue. Dan Ives, a senior analyst at Wedbush, highlighted soft demand in key markets like the U.S., China, and Europe. He attributed part of the decline to a “brand crisis” stemming from CEO Elon Musk’s public stance on political issues.

“The brand crisis issues are clearly having a negative impact on Tesla… there is no debate,” Ives said in a note to investors. “We knew the first-quarter figures would be bad, but they were even worse than expected.”

Tesla’s stock has fallen by nearly 50% since hitting a record high in mid-December. Some analysts had anticipated a boost in investor confidence due to expectations of favorable regulatory policies under a potential second Trump administration. However, those hopes have been overshadowed by concerns over the backlash against Musk’s leadership and its impact on Tesla’s customer base.

Rising Competition and EV Market Slowdown

The electric vehicle industry as a whole has seen a slowdown in sales growth, but Tesla has been particularly vulnerable to rising competition. Chinese automaker BYD, a major rival in the EV market, recently unveiled advanced battery technology that allows for ultra-fast charging, putting further pressure on Tesla’s market share.

In recent months, Tesla has aggressively cut prices and introduced incentives such as zero-interest financing to attract buyers. However, these efforts have not been enough to offset the slowdown.

The company’s struggles are reflected in the stock market as well, with Tesla shares slipping nearly 6% in early trading on Wednesday following the release of its delivery figures.

With Tesla’s first-quarter earnings report approaching, investors will be closely watching for further indications of how the company plans to navigate these growing challenges in an increasingly competitive EV market.

The European Union faces a potential economic shock as former U.S. President Donald Trump prepares to announce sweeping tariffs on European goods, a move that could slash exports by at least €85 billion and severely impact key sectors such as automobiles and pharmaceuticals.

The new tariffs, expected to be as high as 20% on all EU imports, are part of a broader trade policy shift that Washington has dubbed “Liberation Day.” If enacted, the measures would escalate transatlantic trade tensions and deal a significant blow to Europe’s already fragile industrial economy.

Germany and Central Europe Face the Biggest Impact

The EU exported €382 billion worth of goods to the U.S. in 2024, making America its largest single export market, accounting for 12% of the bloc’s total external trade. The automotive industry—one of Europe’s most vital export sectors—stands to suffer the most.

EU vehicle exports to the U.S. reached €46.3 billion last year, and with the new tariffs adding to an existing 25% levy imposed in March, combined duties on European cars could climb to 45%. This increase threatens to make European vehicles uncompetitive in the U.S., leading to a near-collapse in shipments.

Germany, Slovakia, and Hungary are particularly vulnerable, given their heavy reliance on automotive exports. Germany’s key manufacturing hubs—including Stuttgart, Upper Bavaria, and Wolfsburg—could see substantial losses, impacting Mercedes-Benz, BMW, and Volkswagen.

Slovakia, home to Kia and Volkswagen plants, and Hungary, which hosts Audi’s production in Gyor, also face significant risks. Any slowdown in Germany’s automotive exports would disrupt Central Europe’s tightly integrated supplier network, further amplifying economic consequences.

Pharmaceutical Sector Also at Risk

Pharmaceuticals, the EU’s most profitable export category to the U.S., are another major target. In 2023, pharmaceutical exports to the U.S. generated record trade surpluses, with Ireland and Denmark leading the sector, thanks to the success of companies like Novo Nordisk.

However, reports suggest that Trump may impose a specific tariff on semaglutide—the active ingredient in Novo Nordisk’s best-selling weight-loss drug, Ozempic. Such a move could significantly impact Denmark’s pharmaceutical sector while giving an advantage to American competitors.

Potential Economic Fallout and ECB Response

Goldman Sachs analysts warn that the new tariffs could push the eurozone economy toward a slowdown, if not a full recession. In their baseline scenario, the average tariff on EU goods would rise from 7% to 20%, leading to a 0.7% reduction in the euro area’s GDP by the end of 2026.

A worst-case scenario—where additional U.S. adjustments to Europe’s value-added tax system increase tariffs to 43%—could trigger a 1.2% cumulative GDP loss and push the eurozone into a technical recession by 2025. Inflation is also expected to rise, with core inflation potentially peaking at 2.3%.

In response, the European Central Bank (ECB) is likely to implement monetary easing. Analysts expect the ECB to cut interest rates in April and June, with another 25-basis point cut in July, bringing the deposit rate down to 1.75% to counteract economic stagnation.

As the EU braces for the official tariff announcement, concerns are mounting over the broader implications for trade, investment, and geopolitical relations between Europe and the U.S.