The escalating trade tensions have sparked a significant shift in investor behavior, driving demand for traditional safe-haven assets. Gold prices surged to $2,909.70 per ounce as investors sought refuge amid market volatility1. However, the U.S. dollar, typically considered a safe haven, has shown unusual weakness, depreciating over 5% against other currencies this year2.

Other safe-haven assets experiencing increased demand include:

• Swiss franc and Japanese yen, which have shown strong performance against the U.S. dollar3

• U.S. Treasury securities, though their behavior has been atypical with yields rising contrary to expectations4

• Gold and silver, with silver prices climbing to $31.07 per ounce, a 3.79% increase5

This shift underscores the changing perception of safe-haven assets in the face of global trade uncertainties and highlights the need for investors to reassess traditional risk management strategies.

The US-China trade war has escalated dramatically, with both nations imposing unprecedented tariffs on each other's goods. President Trump raised tariffs on Chinese imports to 125%, which was later clarified by the White House to be 145% when including previously announced tariffs12. In retaliation, China increased its tariffs on US goods to 125%, up from 84%34. This tit-for-tat escalation has sent shockwaves through global markets, with the S&P 500 falling 3.5%, the Nasdaq dropping 4.3%, and the Dow Jones Industrial Average decreasing by approximately 1,000 points25.

• The trade war is evolving into a direct clash between the US and China, causing unpredictable market reactions2.

• Analysts warn of potential long-term economic consequences, including reduced global trade volumes and downgraded growth forecasts6.

• Despite the escalation, both sides have expressed openness to negotiations, though China insists on "fair and mutually respectful" terms7.

European stock markets experienced significant declines as President Trump's tariffs took effect, with the regional Stoxx 600 index falling 2.7% and key sectors facing substantial losses12. The impact was particularly severe for:

• Luxury stocks: Companies like LVMH, Pandora, and Burberry saw immediate slumps due to their reliance on US sales and exposure to emerging markets1.

• Financial services: Banks across Europe, including Société Générale, BNP Paribas, and UniCredit, led the losses1.

• Automotive sector: The Stoxx Autos index dropped 3.9% as Trump's 25% tariffs on imported vehicles took effect2.

• Shipping: Danish shipping giant AP Møller Mærsk fell around 9%, reflecting concerns over global trade disruptions1.

While most sectors suffered, defensive sectors like utilities outperformed as investors sought safe havens amid the market turmoil12.