On March 4, 2025, the global financial markets faced turmoil as newly imposed tariffs by the United States on imports from Mexico, Canada, and China sent shockwaves through stock exchanges worldwide, particularly impacting the Borsa di Milano, which plummeted by 3.41% to close at 37,736 points. This dramatic decline was exacerbated by fears over the economic repercussions of these tariffs, which saw major companies like Stellantis, STM, and Iveco suffer significant stock declines.
Canadian Prime Minister Justin Trudeau expressed deep concern about the tariffs, stating, "Today the United States has launched a trade war against Canada." He emphasized the negative effects such trade policies could have on American families, arguing there is "no justification or need for these tariffs." His sentiments underscored the belief among many global leaders and economists alike: trade wars yield no true victors.
On the same day, Stellantis' stock fell by 11.2% to 10.94 euros due to fears over how American tariffs might affect its operations. Analysts are estimating potential EBIT erosion of 3.4 billion euros for 2025 if the changes lead to increased operational costs absorbed by the company, which primarily exports vehicles produced both in Mexico and Canada.
Across Europe, markets mirrored Milan's trends. The day concluded with Milan down 3.5%, and similar drops across other major exchanges: Paris fell by 1.9%, Frankfurt by 2.8%, and London by 0.9%. Investor confidence plummeted as concerns mounted over the energy sector and the spillover effect of tariffs on numerous industries spanning automotive, technology, and financial sectors.
European manufacturers are particularly worried about the tariffs leading to steep declines across various sectors. Emanuele Orsini, President of Confindustria, voiced this concern, calling the tariff announcement "a wake-up call for Europe," stressing the need for strengthened support for industries. He highlighted the enormous financial stakes involved, noting Italy's substantial export volume of 626 billion euros and its surplus exceeding 100 billion euros for 2024. "The tariffs are undeniably harmful to the European economy," he stated.
Further compounding the situation, Claudia Sheinbaum, President of Mexico, announced plans to implement tariff and non-tariff measures as countermeasures to the US tariffs, indicating Mexico's readiness to respond boldly. "We will seek negotiated solutions, but the unilateral measures imposed by the United States obligate us to retaliate," she asserted, signaling the potential for increasing trade friction.
China's government also reacted to developments, with officials stating, "If the United States continues to push for trade war measures, China will fight to the end." Following the implementation of 10% tariffs on Chinese imports by the US, China announced its own retaliatory tariffs ranging from 10-15% on key American agricultural goods. A spokesperson for China's Ministry of Commerce emphasized the nation's commitment to defending its rights against what they perceive as unilateral aggression from the US.
The fallout from the US tariffs is expected to have far-reaching economic consequences. The European Union, via spokesperson Olof Gill, expressed deep regret over the US's decision, warning it could disrupt global trade and create unnecessary uncertainty. Gill stated, "The EU firmly opposes protective measures undermining open and fair trade, and we urge the United States to reconsider their approach to favor cooperative and rule-based solutions."
Economic analysts are anticipating dire outcomes. If the EU fails to take measures to uphold its trade interests, it could face job losses estimated between 40,000 and 70,000, with potential economic costs totaling between 86.5 billion and 93.1 billion euros, significantly hindering growth prospects.
The tariffs are not just limited to Europe; the impact could ripple globally, with International Monetary Fund analysts predicting potential global GDP reductions of up to 7% and specific losses of around 260 billion euros from diminished European growth. Amidst this crisis, fears of rising inflation are also prevalent, as experts anticipate increased costs of goods resulting from tariffs could lead to inflation rates in the US exceeding 5.2%.
The realization of these economic predictions hinges on how governments react to the situation. The storm of tariffs announced by Donald Trump marks not merely another economic occurrence, but perhaps is indicative of shifting tides toward isolationism and significant transformations within global trade dynamics.
While global leaders grapple with the fallout of these tariffs, time will tell how the world economy will adapt, and whether the lessons learned from this moment will inform future decisions on international trade practices. There is little doubt; the need for collaboration and measured responses is now more pressing than ever.