Stock markets saw some volatility on Tuesday as U.S. President Donald Trump's new levies on imports came into effect, with investors also taking a cautious stance amid renewed AI concerns and disruption.
Markets have largely taken in stride the U.S. Supreme Court's decision to strike down much of Trump's tariff policy and his subsequent move to impose tariffs, initially set at 10%, under a different legal authority.
Trump has vowed to raise this level to 15%, with exclusions expected to remain for goods covered by sector-specific arrangements and the U.S.-Mexico-Canada trade pact.
However, the move has raised questions about other trade deals Washington has agreed to since Trump's tariff blitz in April, with the European Union demanding clarity on the issue before ratifying its agreement.
Major European indices were little changed near midday Tuesday, with London and Frankfurt dipping and Paris edging higher.
"Investors are wary as they brace for further volatility sparked by unpredictable U.S. trade policy and the fallout from AI advances," said Susannah Streeter, chief investment strategist at Wealth Club.
Observers said 2026 could see more tariff-based friction, but they did not expect it to be as painful for markets as last year's upheaval.
Sentiment was also dampened by renewed concerns about the impact of artificial intelligence on the tech sector, with software firms again in the firing line.
The latest blow came from a report Sunday by a firm called Citrini Research that used possible scenarios set in the future showing parts of the global economy that could be at risk from new tools, such as credit card and food delivery firms.
Adding to the downbeat mood was a post by Anthropic saying its Claude chatbot could help to update the COBOL programming language used on IBM computers. IBM fell more than 13% in New York.
"Traders are concerned with the degree to which AI will disrupt rather than enhance corporate profitability and overall levels of employment," said Joshua Mahony, chief market analyst at Scope Markets.
The releases come after Anthropic earlier this month unveiled a model that could replace numerous software tools, including for legal work and data marketing.
While all three main indexes on Wall Street closed down at least one percent, Asia markets fared slightly better on Tuesday.
Shanghai returned from a week-long holiday to rally, while Tokyo also rose and Hong Kong retreated.
The yen fell against the dollar following local media reports that Japanese Prime Minister Sanae Takaichi had voiced concerns about additional interest rate hikes with Bank of Japan (BOJ) Governor Kazuo Ueda.
