The trade wars waged by US President Donald Trump continued in March amid fresh announcements of levies on imports including cars and car parts, and steel and aluminium. President Trump warned of sweeping “reciprocal” tariffs to be announced on 2 April – ‘Liberation Day’.
- The price of gold reached new highs
- The ECB cut rates by 25 basis points
- China set a growth target of “around 5%” for this year
Market turmoil: the trade wars waged by US President Donald Trump continued in March amid fresh announcements of levies on imports including cars and car parts, and steel and aluminium. President Trump warned of sweeping “reciprocal” tariffs to be announced on 2 April – ‘Liberation Day’. Global markets generally fell heavily in March amid fears of a worldwide trade war that could stoke inflation, hit corporate profits, and possibly lead to a US recession. The Dow Jones Industrial Average Index fell by 4.2% over the month, while the Nasdaq Index dropped by 8.2%; meanwhile, the price of gold – often regarded as a safe haven during periods of uncertainty – reached a fresh all-time high.
“Global markets generally fell heavily in March amid fears of a worldwide trade war”
“Further fragmentation of the global economy is a key concern” said the Organisation for Economic Cooperation & Development (OECD), which revised down its US growth forecast from 2.4% to 2.2% this year, and from 2.1% to 1.6% next year. The OECD slashed its growth forecast for Canada this year from 2% to just 0.7%, and predicted that Mexico’s economy would fall into recession. Germany’s 2025 forecast was downgraded from 0.7% to 0.4%, while France was trimmed from 0.9% to 0.8%.
ECB cuts rates again: against a backdrop of mounting uncertainty about the US, European equities performed relatively well in March, buoyed by plans to ramp up defence spending and another cut in the eurozone’s key interest rate. The European Central Bank (ECB) cut rates by 25 basis points to 2.5%, but downgraded its economic growth forecasts for the euro area, which is now expected to grow by 0.9% this year and 1.2% next year, citing “lower exports and ongoing weakness in investment, in part originating from high trade policy uncertainty”. The Dax Index fell by a comparatively muted 1.7% over the month.
China bucks the trend: the Bank of Japan maintained its key interest rate at 0.5% in March and highlighted “high uncertainties … including the evolving situation regarding trade”. The Nikkei 225 Index fell by 4.1%. Elsewhere in the region, China set a growth target of “around 5%” for its economy this year and, in the face of an intensifying trade war, pledged to make domestic demand the “main engine and anchor” of economic growth. The Shanghai Composite Index bucked the global trend during March, rising by 0.4%.
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