New York: Global markets are ready for a fresh smoker Monday after US President Donald Trump launched a trade war with sweeping tariffs in Canada, Mexico and China threatening to undermine economic growth and reignitic inflation.

With Mexico and Canada – the two top trading partners of the United States – promised immediate retaliation and China, saying it would take “countermeasures”, the stage was set to a round turbulence.

The markets got a blow last week when the emergence of China’s Deepseek AI model hit tech shares, and uncertainty about Trump -Tariffer has weighed in wider markets.

The risk of a global trade war could harm US corporate surplus and press inflation, potentially increased US interest rate expectations and further weaken currencies such as the Canadian dollar and China’s yuan.

“I think the markets will respond to this,” said Chief Investment Officer at Siebert Financial in New York, Mark Malek.

“Until now, the market has really been on Trump’s side, but that could change and the market could challenge him for the first time,” he said.

In three executive orders, Trump imposed 25% duty in Mexican and most Canadian imports and 10% on items from China that started on Tuesday.

Canada said it would respond with 25% duty against $ 155 billion of US goods, starting with $ 30 billion, taking effect Tuesday and $ 125 billion 21 days later.

“It’s negative for CAD, MXN and CNH as well as the overall risk,” said Chief Market analyst at ATFX Global in Sydney, Nick Twidale, referring to the Canadian, Mexican and Chinese currencies.

He expects significant movements in currencies when Asian markets open after the hope of a postponement was stabbed.

Canada’s dollar has been in the firing line in recent days and hit five-year low level around 1,459 per year. Dollar last week.

Mexico’s Peso would suffer a decrease of almost 12% if the United States hits the country with 25% trading barifers, Estimated JPMorgan in a note published Friday.

Analysts also expect some form of sales in shares and other assets at higher risk when markets reopen Monday.

Chief Investment Officer at Cetera Financial Group, Gene Goldman, said the combination of high valuations, the effect of tariffs on inflation and the effects of the Federal Reserve policy would contribute to fall.

With the S&P 500 near all time heights, the index could move 3% to 5% in both directions in the short term, Evercore ISI strategies said in a note.

Tariff pain

Barclays strategists previously estimated that the tariffs could create a 2.8% feature of the S&P 500 company’s earnings, including the expected fallout from retaliatory measures from targeted countries.

The executive order includes a provision that Trump can increase the size and extent of customs if the countries affected seek to retaliate.

Goldman Sachs economists have estimated that customs duties in Canada and Mexico would suggest an increase of 0.7% in core inflation and a 0.4% hit to the gross domestic product.

The potential to increase consumer prices is a particularly sensitive area for investors who are concerned about a resuscitation in inflation that causes the Federal Reserve to stop cutting the rates.

Fed last week, his betting cycle paused, while FED chairman Jerome Powell said officials were waiting to see what policies have been adopted “with the new president.

The European Central Bank politician Klaas Knot said on Sunday that he expects new tariffs to lead to higher inflation and interest rates in the United States, which is likely to weaken Euro EUR = EBS.

Europe is also facing the risk of US tariffs.

“It’s only a matter of time before the EU is targeted,” said Marchel Alexandrovich, an economist at Saltmarsh Economics in London.

“Meanwhile, the fact that Canada is responding and putting customs duties against US goods, a sign of the upcoming things and demonstrating the risk of global trade.”