Global Markets Erupt! Trump's Tariff Threat Sparks Gold Frenzy as UK Banks Soar

A seismic shockwave just hit global markets! US President Donald Trump is threatening 100% tariffs on Canadian imports. This stunning move comes amid Canada's new trade relationships with China. Investors are scrambling for safety.

Gold Shatters Records

The immediate fallout? Gold prices have exploded. The yellow metal soared past an unprecedented $5,000 an ounce for the first time ever. This historic rally reflects deep market anxiety. Gold jumped an astonishing 15% in just 26 days this year. This builds on a staggering 65% increase in 2025. It's a clear flight to safety as geopolitical uncertainty mounts.

Canada Fights Back on Tariffs

Canadian Prime Minister Mark Carney is pushing back. He insists Ottawa's dealings with Beijing align with CUSMA obligations. Carney stated Canada has "no intention" of pursuing a free trade deal with China without prior notification. The recent Canada-China deal reversed previous 100% tariffs on Chinese electric vehicles. It also reduced tariffs on canola and other products.

• Prime Minister Carney is actively diversifying trade.

• He has visited France, China, Qatar, and Switzerland this month.

• A trip to India is likely soon.

• Canada aims to double non-US exports in the next decade.

However, the Bank of Canada faces a dilemma. Its current interest rate hold could be disrupted. This would happen if US trade barriers worsen. China, for its part, claims the Canada deal is not targeting the US.

UK Banking Sector Braces for Big Profits

Across the Atlantic, UK banks are preparing for a massive boost. Major players like HSBC and NatWest are set to raise their profit targets. This follows a trend seen among European rivals. Barclays is also expected to lift its targets.

Peter Rothwell, KPMG UK's head of banking, commented on the situation. He noted UK banks benefited from "earnings resilience." This resilience lasted longer than expected. Higher interest rates, robust credit quality, and tight cost control played a role.

The broader UK private sector saw accelerated growth in January. The composite output index hit a 21-month high of 53.9 points. Growth is primarily driven by financial services and tech. Manufacturing is also showing signs of recovery.

AI's Rapid Ascent and US Economic Jitters

Artificial intelligence is rapidly reshaping the business world. Experts predict 2026 will see AI systems building other AI systems. This could overturn entire business models. A staggering 72% of global CEOs now see AI as central to their mandate. Companies plan to double AI spending this year. In the UK, financial services are gearing up for a major hiring spree for AI experts.

Meanwhile, the US economy shows mixed signals. Business activity remained steady in January. However, concerns persist over import tariffs. Higher costs are also a worry for firms. Chris Williamson, S&P Global Market Intelligence's chief business economist, stated, "Increased costs, widely blamed on tariffs, are again cited as a key driver of higher prices." Data center construction is now the largest contributor to US economic growth.

Canada's Craft Beer Under Pressure

Even Canada's craft beer industry is feeling the pinch. Breweries face inflation and US aluminum tariffs. Declining alcohol consumption is also a factor. Alcohol sales dropped 20% between 2019 and 2025. Taxes now account for about half the cost of a beer.

What's Next

The coming days will be critical. Watch for further developments in the US-Canada tariff dispute. The Bank of Canada's upcoming interest rate decision on Wednesday is highly anticipated. Market volatility, especially for gold, is expected to continue. The rapid integration of AI will also remain a top business story.