Trump’s second term shakes global markets, ignites trade war tensions

U.S. President Donald Trump’s second term is off to a turbulent start, sending shockwaves through global markets and raising concerns over escalating trade wars.

Over the past 48 hours, major international stock indexes have fluctuated wildly as the administration announced aggressive tariff policies before partially walking them back.

Trump initially imposed heavy tariffs on imports from Mexico, Canada and China, triggering sharp declines in stock markets across the world. The Dow Jones, Nasdaq and S&P 500 each dropped 1.5%, while Japan’s Nikkei fell by 3%. Meanwhile, the Mexican peso and Canadian dollar tumbled, and crude oil prices surged.

In a surprise reversal, Trump later announced a one-month delay on the 25% tariff for Mexico and Canada. The move followed a reported phone call with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, during which the two leaders assured Trump of stricter border controls to curb illegal immigration and drug trafficking.

China, however, remains a key battleground. The U.S. imposed a 10% tariff on all Chinese imports starting Feb. 4, targeting steel, electronics and automobiles. Shortly, Beijing retaliated, announcing new tariffs on U.S. coal and liquefied natural gas at 15%, and a 10% duty on crude oil, agricultural equipment and vehicles beginning Feb. 10.

As the trade war escalates, Trump has also set his sights on the European Union, particularly France and Germany, accusing them of exploiting the U.S. market. He has threatened higher tariffs on European cars unless the EU agrees to what he calls a “fair deal.” The European Commission, in response, has vowed to retaliate if unfairly targeted.

Beyond economic policy, Trump’s cabinet selections have drawn significant controversy. His administration is now stacked with staunch loyalists, many of whom have faced criticism in the past.

Notable appointments include Fox News anchor Pete Hegseth as defense secretary, former Florida Attorney General Pam Bondi as attorney general, and businessman Doug Burgum as secretary of the interior. Tulsi Gabbard, a vocal critic of the “deep state,” now serves as director of national intelligence, while Trump’s first-term intelligence chief John Ratcliffe has taken over the CIA.

One of the most surprising decisions involves tech mogul Elon Musk, who has been granted authority over government contracts and Pentagon defense agreements. According to reports, Musk now has the power to review and potentially halt key federal funding projects. The move has sparked alarm in Washington, with critics arguing that such control in the hands of a private businessman is unprecedented and dangerous.

Meanwhile, Trump’s hardline stance on immigration has led to mass departures of undocumented migrants. In just three weeks, thousands have either been deported or left voluntarily, fearing arrest. Strict new executive orders have also curtailed asylum opportunities, and National Guard troops have been deployed to border states like Texas and Arizona to reinforce security.

The Trump administration’s rapid policy shifts have unsettled both allies and adversaries, raising questions about America’s global standing. If trade tensions persist and immigration enforcement intensifies, analysts warn that the U.S. could face growing diplomatic isolation.

With Trump at the helm for another four years, uncertainty looms large. As global markets brace for further shocks, the world is watching to see just how far the president is willing to push his confrontational agenda.