Global stock markets decline as tariff fears offset inflation relief

Donald Trump threatened duties of 2008 on European beverage imports if the EU does not remove US surcharges

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Equities around the world fell and US Treasury yields rose on Thursday as investors worried about global trade tensions after US President Donald Trump threatened duties of 200% on European beverage imports if the EU does not remove US whiskey surcharges.

Investors were also keeping an eye on wrangling over a possible, partial, US government shutdown.

Thursday's labour Department's Bureau of labour Statistics data showed US producer prices (PPI) were unexpectedly unchanged in February. This was after Wednesday's data showed US consumer prices (CPI) rose more slowly than expected.

But investors worried that the cooling trend would not be sustainable as tariffs on imports raise prices in coming months.

“The February CPI and PPI reports were both better than expected, and show that the turn of the year spike in inflation was likely noise and not signal,” said Bill Adams, Chief Economist for Comerica Bank in a research note.

But he wrote that the inflation outlook depends more on government policies as tariffs, deportations and Department of Government Efficiency (DOGE) moves than “the backward- looking data releases right now.”

Trump's increased tariffs on all US steel and aluminium imports took effect on Wednesday, drawing swift retaliation from Canada and the European Union.