Trump & tariffs

What is going on?

Donald Trump caused global turmoil yesterday with new U.S. tariffs. A 25% tariff has been imposed on goods from Canada and Mexico, along with a 10% tariff on China. However, the tariffs on Canada and Mexico have been put on hold for 30 days, while China has responded by filing a complaint with the WTO, imposing retaliatory tariffs on coal and natural gas, and launching an investigation into whether Google has violated China’s competition laws.

What is shaking European stock markets the most, however, is Trump’s promise that the EU is “definitely and soon” next in line. European growth is already far from impressive, and these latest developments have, to say the least, created turmoil across the EU.

So what happens to interest rates in preparation for a potential global trade war and a brake on free trade? Rising loan prices are leading to falling interest rates, which is a clear indication that the ECB expects to support a weakening European economy in the near future with lower rates.

The bad Trump news comes on the heels of DeepSeek, which caused turmoil last week. The short version is that a Chinese AI company poses a real threat to U.S. AI dominance by training AI models with far fewer resources. This is where the high stock valuations cannot withstand even the slightest disruption, as they are priced for perfection. As a result, AI dragged the entire value chain down with it. The chip sector saw broad declines, with Nvidia leading the way. Nvidia produces the leading GPU for training LLMs (Large Language Models) like ChatGPT. The stock plummeted by 17% in a single day, wiping out approximately 4.3 trillion DKK ($610 billion), marking the largest one-day drop for a single stock in U.S. market history. Doubts also emerged regarding the construction of nuclear power plants to power large data centers, affecting multiple sub-industries. It wasn’t just the tech sector that took a hit.

And what if you’re only exposed to the Danish market? Last year, the OMX C25 ended in negative territory, and over the past four months alone, it’s down 15% for those who kept their money within Danish borders. Ørsted has plunged 80% over the past four years, while the crown jewel of Danish stocks, Novo Nordisk, has dropped more than 40% in just the past six months.