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Morning bid Europe-It seems investors don't really like tariffs

Wayne Cole gives us a look at what the future holds for European and global markets.

Investors are not happy with a trade war fueled by tariffs and a likely recession. Who knew? Wall St Futures and the Nikkei are both down about 3%. European stock futures have fallen around 1.7%. The Treasury yields have hit multi-month-lows while the dollar index has hit a six-month-low in chaotic conditions.

The reaction matched the drama surrounding the announcement as President Donald Trump announced various taxes on live television from a large blue and yellow board. The list included 34% more for China, 20% for the EU, 32% Taiwan, 24% Japan, and 46% Vietnam.

Included high levies on Asia were a clear shock for tech stocks, as it will increase costs across their supply chain. Apple shares fell 7% following the bell.

Contrary to the arguments of the White House most analysts see the end of the free trade agreement as a shock for U.S. economic growth, and the likelihood of recession will increase.

Fed funds futures rose in price to reflect 80 basis points in Fed easing in this year. This is true even though tariffs are sure to cause a sharp spike in U.S. inflation. Analysts have predicted price increases of up to $10,000 for new cars alone.

Fed officials often say that they are willing to overlook a single increase in price, but this pandemic illustrates what happens when companies realize they can raise prices and then blame someone else.

The White House has said it is open to horse-trading with other countries. The shifting sands will make it difficult for companies to plan investments over the long term.

Then there are the countermeasures that will be taken as countries prepare to oppose Trump's world order. Ursula von der Leyen, President of the European Commission, was on the phone just moments ago to promise retaliation if negotiations failed.

Students of history know that the Smoot Hawley Tariffs, implemented by the United States in the early 1930s, are what put the "great " in "the Great Depression".

Are you trying to stay up-to-date with the latest news on tariffs? Our daily news digest provides a quick overview of the most important headlines that impact global trade. Tariff Watch is available here.

The following are key developments that may influence the markets on Thursday.

- EU Producer Prices, Service PMIs

US trade data ISM services and weekly jobless claims. Fed Vice Chair Jefferson, and Governor Cook talk

(source: Reuters)