US stock markets edged higher on Monday, shrugging off fresh economic turbulence sparked by renewed tariff threats from former President Donald Trump. Despite a volatile start, the Dow Jones Industrial Average closed up 35 points, while the S&P 500 rose 0.41% and the Nasdaq gained 0.67%, buoyed by investor optimism in select sectors.

The gains came in the shadow of escalating trade tensions. Trump, in a defiant move last Friday, announced a steep hike in steel import tariffs to 50%, doubling the current rate, in what he described as a bold effort to protect American steelworkers. Speaking at a US Steel plant in Pennsylvania, he declared, “At 50%, nobody’s getting over that fence.”

Global markets, however, painted a more cautious picture. The US dollar slipped broadly, with the dollar index falling 0.65% amid fears of a deeper trade war. Bond markets saw yields rise as investors exited for riskier assets, while gold surged nearly 3% as a safe-haven hedge.

Winners and Losers on Wall Street

The tariff news jolted sector performance. US steelmakers soared, with Cleveland-Cliffs jumping over 23%, and Nucor and Steel Dynamics each climbing roughly 10%. In contrast, automakers took a hit—Ford dropped 3.85%, General Motors fell 3.87%, and Stellantis lost 3.55%—as concerns mounted over rising material costs.

International Fallout: Allies and Rivals Respond

Beijing swiftly accused Washington of reigniting trade tensions, warning that the US was “provoking new economic and trade frictions.” Meanwhile, the European Union threatened retaliatory tariffs if no resolution is reached by mid-July. EU trade spokesperson Olof Gill warned that countermeasures could arrive sooner “if circumstances require.”

Canadian steel producers also voiced alarm. Catherine Cobden, president of the Canadian Steel Producers Association, warned the tariffs would disrupt cross-border supply chains, calling the move a “massive setback.”

Market Analysts Split on Trump’s Resolve

While some analysts view Trump’s announcement as political posturing, others believe the former president may be doubling down on protectionist policies. “This is the first tariff push since Trump was accused of always backing down,” noted UBS economist Paul Donovan, referencing the “TACO” acronym coined by analysts—Trump Always Chickens Out. “This time, he appears determined to hold the line.”

Still, IG market strategist Chris Beauchamp suggested investors remain cautiously optimistic: “The market reaction has been muted. Traders seem to believe this will end in a walk-back, not a full-blown trade war.”

Oil Prices Jump on Geopolitical Risks

Energy markets also moved sharply. Oil prices rose following a reported drone strike by Ukraine on Russian military bases over the weekend. WTI crude gained 2.85% to $62.52, while Brent crude rose nearly 3% to $64.63 per barrel.

The spike came despite OPEC+ announcing a third consecutive monthly increase in oil output. Analysts noted the hike was more conservative than expected. “The market was bracing for a bigger supply jump,” said Mizuho analyst Robert Yawger.

Global Markets Mixed

Across Asia and Europe, market sentiment remained fragile. The Hang Seng Index dropped 0.6%, Japan’s Nikkei 225 slipped 1.3%, and Germany’s DAX dipped 0.28%. Only South Korea’s KOSPI managed a modest 0.1% gain. Europe’s Stoxx 600 ended the day down 0.14%.

With trade frictions, inflation concerns, and geopolitical flashpoints converging, investors are bracing for a volatile summer.