Markets Edge Higher Despite Trump’s Tariff Threats Toward Europe

Global Stocks Rebound as Investors Weigh Potential EU Tariffs and Trade Disruption

Global equity markets opened the week on a largely positive note despite mounting trade tensions after former President Donald Trump issued a bold warning of 50% tariffs on European Union imports, citing a lack of progress in trade negotiations with the bloc. While the threat immediately stirred uncertainty across the Atlantic, markets appeared to shake off the geopolitical headwinds — rising steadily on Monday, May 26, 2025.

Wall Street Reels From Tariff Fears

Despite a strong open in global markets, Wall Street finished lower on Friday, still digesting the fallout from Trump’s escalating rhetoric. The proposed tariffs target a wide array of European exports and have already begun to rattle investor confidence in multinational tech and consumer companies.

Apple Inc. bore the brunt of the pressure, slumping 3.0%, underperforming broader indexes after Trump also hinted at a 25% tariff on iPhones not manufactured in the US. This sent shockwaves through the tech sector, especially as Apple maintains a sizable chunk of its assembly operations outside US borders. The threat could significantly alter the company’s cost structure and supply chain, spurring speculation about reshoring efforts and higher device prices.

Amazon shares also retreated, sliding 1.0% on Friday, amid concerns that retaliatory European measures might target digital services and cloud-based platforms — key revenue streams for the tech behemoth.

Forex Market: Dollar Firm as Safe-Haven Demand Grows

Amid heightened trade risks, the US Dollar advanced against major peers as investors sought refuge in the greenback. Here's how key currency pairs moved:

Currency Pair	Change
EURUSD	+0.1%
GBPUSD	+0.1%
USDJPY	+0.2%
AUDUSD	+0.3%

The slight uptick in EURUSD and GBPUSD reflected resilience in European and UK currencies despite tariff pressures. The USDJPY rise points to growing risk sentiment as investors position defensively. Meanwhile, the Australian dollar climbed, buoyed by a broader risk-on mood in Asia-Pacific markets.

Global Equities: Rebound Despite Uncertainty

Global equity indexes demonstrated remarkable resilience, climbing on hopes that the tariff threats may be more political posturing than immediate policy, especially as the 2024 US presidential election cycle continues to shape headlines.

Index	Change
DJI	+1.1%
NIKKEI	+1.9%
HK50	-1.1%
AU200	+0.6%

• The Dow Jones Industrial Average (DJI) rebounded strongly, led by banking and industrial stocks that stand to gain from domestic-focused supply chains.
• Japan’s Nikkei 225 surged nearly 2%, driven by tech and automotive sectors that could benefit if global supply chains shift due to transatlantic tariffs.
• Hong Kong’s Hang Seng Index (HK50) fell 1.1%, weighed by ongoing concerns over China’s economy and increasing geopolitical friction.
• Australia’s ASX 200 (AU200) posted moderate gains, boosted by energy and mining shares.

Commodities: Oil Steady, Gold Slips

Commodities markets remained largely stable on Monday, with investors waiting for further clarity on the US-EU trade front.

Commodity	Change
Brent Crude	+0.1%
WTI Oil	+0.1%

Crude oil held steady amid low volume, with gains supported by optimism for energy demand in Asia and a potential summer travel boom. On the flip side, Gold (XAUUSD) declined slightly:

Metal	Change
Gold (XAUUSD)	-0.2%

Gold’s slip suggests that investors may be rotating into risk assets for the short term, even as longer-term geopolitical concerns persist.

Looking Ahead

Markets now turn their focus to key economic reports and potential responses from European policymakers. The European Commission is expected to respond to Trump’s tariff threat later this week, possibly signalling whether the bloc will pursue negotiation or adopt retaliatory measures.

Meanwhile, in the US, investors are awaiting the release of new housing data, consumer confidence readings, and unemployment claims — all of which could influence Federal Reserve policy expectations.

Final Thoughts

While the rhetoric of steep tariffs against Europe introduces a fresh layer of geopolitical uncertainty, markets have demonstrated a surprising degree of optimism. For now, investors appear to be betting that diplomacy — or delays — will prevail before any drastic trade shifts are enacted.

However, if threats materialize into firm policy, expect significant volatility across equities, currencies, and commodities in the weeks to come.

Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Always consult with a licensed financial advisor before making investment decisions.