Trade Tensions: Trump's Tariffs Shake Global Markets

Investors anticipate a significant impact on U.S. corporate profits and inflation following President Trump's executive order to impose tariffs on imports from key trading partners including Mexico, Canada, and China. Markets have yet to absorb the potential ramifications of these tariffs, sparking uncertainty among investors.

Investors are on high alert as President Donald Trump's recent executive order introduces tariffs on major U.S. trading partners, expected to shake corporate profits and inflation. The market seems unprepared for the possible ramifications of these tariffs on international imports.

Announced on Saturday, the tariffs target Canada and Mexico with a 25% levy and China with a 10% duty. The White House hinted at the tariffs coming into effect by Tuesday, 12:01 a.m. ET, although Trump mentioned the possibility of exempting Canadian oil imports. The president's decision is aimed at curbing illegal immigration and fentanyl flow into the U.S.

Economists from Goldman Sachs foresee a resultant 0.7% increase in core inflation and a 0.4% GDP hit if these tariffs are universally applied. Investors are bracing for market impacts and potential selloffs, wary of this geopolitical shift's long-term effects on inflation and the Federal Reserve's policies.

(With inputs from agencies.)