Global financial markets plunged on Monday following U.S. President Donald Trump’s stark warning to foreign governments that they must pay “a lot of money” to lift sweeping tariffs set to take effect this week. Characterizing the tariffs as “medicine,” Trump dismissed concerns about global equity market losses, stating that sometimes tough measures are necessary to fix deeper problems. His remarks, made aboard Air Force One after a weekend in Florida, rattled investors and triggered fears of a global recession.
Markets across Asia were hit hard, with Japan’s Nikkei index plummeting to a one-and-a-half-year low and major banks losing nearly a quarter of their value in just three days. U.S. stock futures also fell sharply, while global oil prices sank. Financial experts and political leaders voiced concern over the economic fallout, with billionaire fund manager Bill Ackman calling for a pause on the tariffs to avoid what he described as an “economic nuclear war.” Despite the turmoil, Trump’s top advisers framed the tariffs as part of a strategic shift in global trade, claiming over 50 nations had entered talks with the U.S. since the announcement.
The uncertainty surrounding Trump’s trade strategy has increased the likelihood of interest rate cuts by major central banks. Economists at JPMorgan and Goldman Sachs revised their GDP forecasts downward for both the U.S. and China, with recession risks now pegged as high as 60%. The Reserve Bank of New Zealand, the first central bank to meet post-announcement, is expected to lower rates on Tuesday in a move that could set the tone for global monetary easing in response to the growing economic shockwaves.
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