Customs Tensions: Global Markets Hold Steady – But For How Long?

The global stock markets regained some stability on Tuesday, after three days of historic turbulence, despite the worsening trade tensions triggered by Donald Trump’s new protectionist measures.

Asian markets rebound thanks to Chinese support measures

Beijing deployed an arsenal of emergency measures on Tuesday to stabilize its struggling financial markets. These initiatives bore fruit immediately. The Hang Seng Index in Hong Kong rebounded by 1.51%, reaching 20,127.68 points, sharply contrasting with its steep decline of 13.2% the previous day, a sign of the measures’ impact on the markets and potentially on Bitcoin.

This recovery relies on two pillars: first, the formal commitment of several Chinese state-owned enterprises to invest heavily in domestic stocks, and then the announcement by many listed companies of share buyback programs to support their stock prices.

In mainland China, the Shanghai Composite Index recorded an increase of 1.58%, closing at 3,145.55 points. The People’s Bank of China simultaneously lowered the yuan’s exchange rate to 7.2038 per US dollar, its weakest level since September 2023.

This strategic devaluation aims to make Chinese exports more competitive in the face of new tariffs imposed by Washington.

Japan experienced an even more spectacular rebound with a 6.03% rise in the Nikkei index, which closed at 33,012.58 points. This exceptional performance directly results from the announcement made by Scott Bessent, the US treasury secretary, placing Japan at the top of the list for trade negotiations with the Trump administration.

Investors regained confidence after learning that the US president had mandated two members of his cabinet to quickly initiate bilateral discussions with the government of Prime Minister Shigeru Ishiba.

Europe breathes despite persistent tensions with Washington

The European markets also regained some color on Tuesday, with the Stoxx Europe 600 gaining about 1% as trading began. Almost all major markets in the region returned to the green, although the pan-European benchmark index remains about 15% below its peak reached in early March.

This improvement occurs in a tense context between Brussels and Washington. Ursula von der Leyen, President of the European Commission, proposed a “zero-for-zero” tariff agreement with the United States, an offer quickly rejected by Donald Trump.

The US president is demanding “significant annual payments” before even considering any reduction in tariffs, a request that the EU has labeled as “extortion.”

Despite these diplomatic tensions, European investors seem to have digested the initial shock caused by last Saturday’s announcement of a 10% tariff on all US imports, a rate that is set to increase to 20% for the European Union starting Wednesday.

A trade war that is intensifying

The situation is worsening on the Sino-American front. After China announced a 34% tax on American products in response to Trump’s measures, he retaliated with a threat to impose “additional” tariffs of 50% on Chinese products if Beijing does not back down.

On his platform Truth Social, the US president described China as the “biggest freeloader” and stated that he would no longer accept any requests for meetings from Beijing.

For its part, the Chinese government has labeled the American threat as “error on error” and likened it to “blackmail.” This verbal and tariff escalation foreshadows particularly difficult negotiations in the coming weeks.

Despite this return to calm in financial markets, trade tensions continue to intensify between the major global economic powers. The $3.25 trillion evaporated in 24 hours at the height of the crisis serves as a reminder of the fragility of a global financial system now dependent on the geopolitical decisions of Donald Trump.