Global markets fall after Trump threatens tariffs, fires Fed governor

ISTANBUL

Global markets were in negative territory on Tuesday after US President Donald Trump dismissed Federal Reserve Governor Lisa Cook and threatened new tariffs on China.

Trump announced Monday that Cook has been removed from her position over allegations of mortgage fraud. The move has been widely seen as an attack on the central bank's independence.

On the tariff front, Trump said he would impose additional tariffs on countries that implement digital services taxes unless they lift these measures. He warned that he would impose restrictions on the export of US-protected technology and chips to these countries.

He also criticized China, saying that if they do not supply magnets to the US, they would face a “200% tariff or something.”

The New York Stock Exchange saw a sell-off on Monday amid the tariff threats. The S&P 500 index fell 0.43%, the Nasdaq dropped 0.22%, and the Dow Jones Industrial Average fell 0.77%.

Trump's decision regarding Cook, which came after the markets closed, also impacted asset pricing. The 10-year US Treasury yield was at 4.3% as of 0615GMT Tuesday, while the US index futures pointed to further losses.

Gold was trading at $3,377 per ounce, up 0.3%, amid concern over the Fed's independence.

The dollar index closed 0.6% higher at 98.3 on Monday and was at 98.4 on Tuesday, 0.1% above the previous close.

European stock markets were dominated by selling on Monday, and indexes were trending negative on Tuesday, echoing US developments.

Asian markets also trended lower. Trump’s criticism of Chinese magnet exports rekindled fears of a renewed trade war, though Beijing has yet to respond.

Japan’s Nikkei 225 index fell 0.87%, the Shanghai Composite in China declined 0.2%, the Hang Seng in Hong Kong was down 0.2%, and South Korea’s Kospi dropped 0.9% near the close.