Global stocks declined on Monday as concerns mounted over President Donald Trump's decision to impose tariffs on major U.S. trading partners, reports AP.

France's CAC 40 fell 1.6% to 7,826.14 in early trading, while Germany's DAX dropped 1.5% to 21,395.31. Britain's FTSE 100 slipped 1.3% to 8,565.00. U.S. markets were also set to open lower, with Dow futures down 1.2% at 44,152.00 and S&P 500 futures falling 1.5% to 5,977.25.

US economy grows 2.3% on eve of Trump return

In Asia, Japan's benchmark Nikkei 225 declined 2.7%, closing at 38,520.09. Australia's S&P/ASX 200 slid 1.8% to 8,379.40, while South Korea's Kospi lost 2.5% to 2,453.95. Hong Kong's Hang Seng edged down less than 0.1% to 20,217.26. Meanwhile, trading in Shanghai was halted due to a holiday.

Analysts noted that Asian markets were bracing for increased volatility amid fears of a potential escalation in the trade war.

“The effects of trade restrictions could lead to a decline in global trade volumes, shifts in supply chains resulting in increased business costs, and higher inflation,” said Yeap Jun Rong, a market strategist at IG.

Shares of SoftBank Group Corp. advanced 0.5% following its announcement at a Tokyo event with OpenAI that they were establishing SB OpenAI Japan. Each company would hold a 50% stake in the venture, which aims to provide AI services to businesses.

Investor sentiment was also shaken by a report from Chinese firm DeepSeek, which claimed to have developed a more cost-effective large language model capable of competing globally. The news raised concerns over whether the anticipated investment in AI chips was justified, leading to declines in some technology stocks.

Despite Trump's tariff threats, technology shares in Hong Kong remained relatively stable, bolstered by DeepSeek’s demonstration of China’s technological prowess.

Trump’s 25% tariffs on most imports from Canada and Mexico, along with 10% tariffs on Chinese goods, are set to be enforced on Tuesday. His administration has not specified the conditions under which these tariffs might be lifted, particularly regarding efforts to curb illegal immigration and fentanyl smuggling.

In response, both Canada and Mexico announced retaliatory tariffs on U.S. products. Canada’s tariffs will take effect on Tuesday, though specific details have yet to be disclosed.

Meanwhile, the U.S. Federal Reserve left its benchmark interest rate unchanged last week, adopting a cautious stance on how Trump’s policies might influence inflation and economic stability.

Asian stocks rise as DeepSeek panic fades

In energy markets, benchmark U.S. crude surged $1.76 to reach $74.29 per barrel, while Brent crude, the global benchmark, gained $1.04 to trade at $76.71 per barrel.

In currency trading, the U.S. dollar inched up to 155.41 JPY.