Global stock markets dropped after Donald Trump approved new tariffs on China, Canada, and Mexico, sparking trade war fears. However, markets regained some ground when Trump agreed to postpone tariffs on Mexican goods for a month.

His announcement caused panic among investors. The S&P 500 initially fell nearly 2% but recovered some losses after the U.S. and Mexico announced a temporary delay. By mid-afternoon, the S&P 500 was down 0.4%, while the Nasdaq slipped 0.8%. The Dow Jones managed to edge slightly higher.

London’s FTSE 100 declined 1.4% from last Friday’s record high before paring some losses. Germany’s DAX, France’s CAC 40, and Spain’s IBEX all dropped over 1%, while Italy’s FTSE MIB slid 0.7%.

Asian markets also reacted negatively. Japan’s Nikkei plunged 2.8%, and Hong Kong’s Hang Seng index lost 1%. Mainland Chinese markets remained closed for the Lunar New Year holiday.

Nvidia, the U.S. tech giant, fell over 5% after Chinese AI firm DeepSeek emerged as a competitor. European carmakers, including Volkswagen, BMW, and Porsche, also saw share prices decline between 5% and 6%.

Several UK firms struggled as well. Scottish Mortgage Investment Trust, JD Sports Fashion, and miner Antofagasta all fell by more than 4%. The British pound weakened against the U.S. dollar but strengthened slightly against the euro. Meanwhile, the Canadian dollar hit a 20-year low before recovering.

Ontario’s Premier Doug Ford responded by blocking U.S. firms from provincial contracts, warning that American businesses would lose billions. Cryptocurrency markets also took a hit, with Bitcoin dropping 6.2% to a three-week low before recovering slightly.

Market analysts remain cautious. JPMorgan Chase warned that Trump’s policies could hurt businesses, while experts fear tariffs may trigger inflation and slow economic growth worldwide, including in the U.S.