Trump's tariff threat sends Asian markets down, gold hits record $4,722
Asian markets fell Tuesday as investors feared a US-EU trade war after President Donald Trump threatened 10% tariffs on Denmark, France, Germany, and Britain from February 1, rising to 25% by June 1. Trump escalated his demands for Greenland, citing national security, and on Tuesday warned of 200% tariffs on French wine and champagne over France declining his 'Board of Peace' invite for Gaza rebuilding. This has revived doubts about last year's US-EU trade deal, with French President Macron calling for new economic retaliation tools while US Treasury chief Bessent warned any EU tariffs would be 'unwise'.
The prospect of a new standoff between the world's biggest economic powers triggered a flight to safety. Stocks dropped across Asia: Tokyo's Nikkei down 1.1%, Hong Kong's Hang Seng down 0.3%, London's FTSE 100 down 0.8%. Gold soared to a record $4,722.76 per ounce, and silver peaked at $94.73. Treasury yields rose as investors moved out of US assets, while Japan's 40-year bond yield hit its highest since 2007 after Prime Minister Sanae Takaichi called snap elections Monday and pledged a two-year food tax cut. Her cabinet approved a record 122.3-trillion-yen ($768 billion) budget for April 2026, raising concerns about borrowing.
World leaders are watching for signals at Davos, where Trump is expected to speak. 'Davos now becomes the theatre that matters. Not for soundbites, but for whether the adults step back into the room,' said Stephen Innes of SPI Asset Management. 'A NATO fracture, even a rhetorical one, is not something markets are trained to shrug off.'
With tariffs possibly starting in less than two weeks and escalation on June 1, will you diversify investments away from risk assets, monitor forex and commodity markets closely, or adjust business plans anticipating supply chain disruptions?