A look at the day ahead in European and global markets from

Kevin Buckland

Europe wakes up to new U.S. tariffs on Canada, Mexico and

China, bringing into starker relief Donald Trump's threat of

levies for the EU next.

Trump seems to have shifted to a harder line, saying his

neighbours to the north and south had "no room left" for

negotiations that would further delay 25% levies, following an

earlier one-month stay of execution.

China got slapped with an additional 10% tariff, doubling

blanket duties imposed just a month ago. The measures took

effect from 0501 GMT.

The response in markets has been swift and decisive: sell

stocks and buy bonds.

After Wall Street took a dive on Monday, equities have sold

off around Asia and European stock futures are pointing some 1%

lower.

Meanwhile, U.S. Treasury yields in Tokyo trading hours are

plumbing their lowest since October.

Crude oil has slumped to three-month lows, and an additional

drop of 30 cents or so in the price of Brent would extend that

milestone by another two months.

It's not just that Trump's trade policies will significantly

drag on global growth, but that they will be a self-inflicted

wound at a time when the U.S. economy is looking more

vulnerable.

Bets for more Federal Reserve easing keep going up.

Traders now price in three quarter-point rate cuts this

year, from two just days ago, and leaning towards only one a

month earlier.

That's keeping the dollar down, in contrast with the trend

previously - when Trump's protectionist policies strengthened

the currency.

Elsewhere, the euro and sterling are holding firm against

the greenback amid pan-European efforts at a Ukraine peace deal,

even as Washington seems to be moving closer to Moscow.

The safe-haven yen is gaining, coming within a whisker of

setting a five-month peak earlier on Tuesday.

Japan is the latest to emerge as a potential tariff target,

with Trump saying on Monday that he lambasted unspecified

Japanese "leaders" by phone for "killing their currency."

Sowing some confusion, Japanese Prime Minister Shigeru

Ishiba said on Tuesday he hasn't spoken to Trump on FX policy.

Trump's tariff threats are turning into reality at an

increasing pace, and it was only last week that he said 25%

levies were on their way for Europe-made "cars and all other

things." April 2 is scheduled to bring a round of so-called

"reciprocal" tariffs from Washington, on top of those already

put in place.

These could all still turn out to be largely a negotiating

tactic rather than the new reality for global trade, and some

investors and analysts certainly ascribe to that view.

For now though, the market would rather sell first and wait

for clarity later.

Key developments that could influence markets on Tuesday:

- Euro zone unemployment rate (Jan)

- New York Fed President John Williams speaks at Bloomberg

Invest event

(Editing by Jacqueline Wong)