A Global Collapse
Global financial markets have experienced a sharp decline as a result of rising trade tensions sparked by new tariffs imposed by former U.S. President Donald Trump. This trade war has had devastating effects on stock exchanges from Asia to Europe, including North and Latin America.
In Asia, the Hong Kong Stock Exchange recorded a historic drop of 13.2%, its worst since the 2008 financial crisis. In Taiwan, the Taiex index suffered its largest daily decline, falling 9.7%, with the technology sector hit especially hard. Despite not being directly affected by the tariffs, TSMC — the global semiconductor giant — saw its stock drop by nearly 10%.
In Europe, the fallout was equally severe. Milan led the losses with a 6.7% drop, followed by Paris (-6.3%), Frankfurt (-6.19%), Madrid (-5.94%), and London (-4.86%). The Euro Stoxx 50 index, which includes the leading publicly traded companies in the eurozone, fell by 6.24%.
In the United States, markets also declined. The S&P 500 lost 0.6% after a cumulative 10% drop over the previous two sessions. The Nasdaq 100, with its heavy exposure to the tech sector, fell 2%, officially entering bear market territory. The Dow Jones Industrial Average dropped 2.54%, closing at 37,340 points.
The new 10% tariffs on U.S. imports came into effect on Saturday, April 5. Another round of tariffs, ranging from 11% to 50%, is expected on Wednesday, April 9, further fueling risk aversion among investors.
Impact on Mexico
The Mexican peso also took a hit, depreciating by 0.90% against the dollar and reaching an exchange rate of 20.62 pesos per dollar. According to Gabriela Siller, Director of Economic Analysis at Banco Base, although the USMCA has prevented a full-scale trade war, the Mexican economy remains vulnerable. Ongoing volatility will continue to pressure the peso amid uncertainty in the U.S. economy.
Mexico’s stock market was not spared either: the IPC index fell 1.75%, or more than 900 points, closing at 50,551 units.
Outlook for Investors
Prominent hedge fund manager Bill Ackman warned: “If we launch an economic nuclear war against every country in the world, business investment will freeze, consumers will close their wallets, and we will severely damage our international reputation, which could take years—if not decades—to repair.”
In this environment, investors remain focused on potential negotiations to ease reciprocal tariffs, as well as upcoming decisions from major central banks around the world. With growing fears of a global recession, capital is flowing into safe-haven assets such as gold, U.S. Treasury bonds, and the dollar. In contrast, assets tied to emerging markets and international trade are under heavy pressure.
Conclusion
In summary, the imposition of new tariffs has triggered a wave of panic across global financial markets. The steep drop in stock prices, depreciation of emerging market currencies, and growing geopolitical uncertainty have created a climate marked by strong risk aversion. Political and monetary decisions made in the coming weeks will be critical in shaping the direction of markets and investor strategies in the near and medium term.
References (APA format)
El Financiero. (2025, April 7). Peso, BMV y Wall Street close in the red amid economic fears. https://www.elfinanciero.com.mx/mercados/2025/04/07/peso-bmv-wall-street-hoy-7-de-abrilde-2025-cotizacion-en-vivo/
Ámbito. (2025, April 2). A financial guru criticizes Donald Trump: “He is losing the trust of top business leaders”. https://www.ambito.com/finanzas/un-guru-financiero-critico-donald-trump-esta-perdiendo-laconfianza-los-principales-empresarios-n6131667
El Universal. (2025, April 3). Financial markets struggle amid Trump’s tariff conflict; dollar opens at 20.72. https://www.eluniversal.com.mx/cartera/mercados-financieros-problemas-por-conflicto-arancelario-de-trump-dolar-abre-en-2072-al-mayoreo/
Aristegui Noticias. (2025, April 2). Trump’s tariff announcement puts global financial markets on high alert. https://aristeguinoticias.com/020425/dinero-y-economia/anuncio-de-aranceles-de-trump-pone-en-alerta-maxima-a-mercados-financieros-mundiales/
