Relations between China and the United States continue to deteriorate as both nations impose fees on each other’s ships, unsettling investors. The new escalation in the trade conflict contradicts President Trump’s social media message: “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday despite a Wall Street rally the previous day, when President Trump attempted to reassure investors about ties with Beijing.
Investor confidence remains fragile as the two largest global economies clash over trade. Both nations will begin charging new fees on each other’s vessels on Tuesday after Washington’s probe into China’s dominance in global shipbuilding.
The United States will charge Chinese ships $50 (€43.27) per tonne of cargo in American ports. China will impose a fee of 400 yuan (€48.65) per tonne and gradually increase it.
On the same day, Beijing sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean to strengthen its maritime influence.
Although the status of trade negotiations remains uncertain, Trump said he may still meet Chinese leader Xi Jinping later this month during a regional summit.
Over the weekend, Trump threatened China with 100% tariffs, then softened his tone online, saying: “Don’t worry about China, it will all be fine! President Xi just had a bad moment. The USA wants to help China, not hurt it!”
Europe Faces Economic Uncertainty
Investors in Europe also remain cautious as France’s new Prime Minister, Sébastien Lecornu, prepares to address parliament at 15:00 CEST. Lecornu aims to restore stability by passing a budget to reduce France’s heavy deficit.
In the UK, unemployment rose to 4.8% in the three months to August, fuelling concern about the nation’s economic health.
By midday, major European indexes traded lower. London’s FTSE 100 fell 0.38% to 9,406.64, Paris’s CAC 40 dropped 0.76% to 7,874.20, and Frankfurt’s DAX lost 0.87% to 24,176.42.
The STOXX 600 slid 0.71%, while Madrid’s IBEX 35 slipped 0.2% to 15,511.00.
EasyJet shares climbed nearly 5% after rumours of a potential takeover by shipping group MSC, despite MSC denying any deal.
“Investors will consider potential buyers for EasyJet, which explains why the shares remain elevated,” said Dan Coatsworth, head of markets at AJ Bell.
Across the Atlantic, Dow Jones futures dropped 0.8%, S&P 500 futures fell 0.94%, and Nasdaq futures lost 1.23%. Meanwhile, US rare earth companies surged amid intensifying trade tensions. Critical Metals jumped over 33%, USA Rare Earth gained 9%, and MP Materials rose 6%.
Markets React to Broader Global Pressures
The euro and British pound weakened against the US dollar, while the Japanese yen strengthened slightly.
Oil prices declined sharply. US benchmark crude fell more than 2% to $58.25, while Brent slipped below $62, losing around 2%.
Gold and silver prices soared as investors sought safe assets. Gold reached $4,156.80, up 0.58%, while silver futures hit a record high above $52 before easing to around $50.
Cryptocurrencies plunged. By noon in Europe, Bitcoin dropped 3.5% to $111,801, while Ethereum lost 6.4%, trading at $4,006.49.
Global market sentiment remains uneasy as fears grow of an AI-driven market bubble. Analysts warn that US stock valuations have outpaced profit growth, echoing concerns reminiscent of the 2000 dot-com crash.
Traders now await corporate earnings for clarity. JPMorgan Chase, Johnson & Johnson, and United Airlines will release financial reports this week, setting the tone for the next market phase.
