As global markets reel from Donald Trump's sweeping tariff announcement, speculators who wagered on a chain reaction of trade retaliation may soon cash in the big prize.

On Thursday, trading on CFTC-regulated prediction platform Kalshi lit up with activity as speculators priced in a sharp rise in retaliatory tariffs from major U.S. trading partners.

The market titled "Which countries will impose tariffs on the US before Q3 2025?" saw odds spike across several jurisdictions in the wake of Trump's announcement.

Global Trade War Now Becomes The Base Case

  • The odds of South Korea enacting retaliatory measures soared to 79%, up 29 percentage points in a single day.
  • Japan followed with a 33-point jump to 73%
  • South Africa climbed to 74%, up 16 points.
  • India saw a more cautious move, with odds now at 35%
  • Kalshi traders assigned a 96% probability that Brussels will strike back with its own tariffs in the coming months.
Only Mexico moved in the opposite direction. Following Trump's exemption of North American partners from the new tariff structure, the odds of retaliation from the southern neighbor collapsed to 45%, down 31 percentage points.

CountryOdds of Tariff RetaliationChange vs. Day Before

  • European Union96% / +12%
  • South Korea79% / +29%
  • Japan73% / +33%
  • South Africa74% / +16%
  • India35% / +9%
  • Mexico45% / -31%
Source: Kalshi

Speaking on Bloomberg TV, U.S. Commerce Secretary Howard Lutnick attempted to downplay the likelihood of backlash, saying the tariffs will be applied broadly and uniformly, and adding that "it will not be effective for countries to retaliate against Trump tariffs."

Country ETFs Witness Deep Declines

Amid the turmoil on Wall Street, U.S.-listed country ETFs took a beating Thursday as investors dumped risk ahead of possible tit-for-tat tariffs,

The VanEck Vietnam ETF (VNM  ) plunged more than 8% in premarket trading, on track for its worst session since March 2020. The U.S. will apply a 46% tariff rate on Vietnam.

Japan's iShares MSCI Japan Index Fund (EWJ  ) dropped 3%, while the iShares China Large Cap ETF (FXI  ) fell 1.8%. The two biggest Asian economies will see their respective tariff rate rising to 24% and 34%, respectively.

India's iShares MSCI India ETF (INDA  ) and South Korea's iShares MSCI South Korea ETF (EWY  ) declined 1.1% and 1.5% respectively. India and South Korea are poised to face a 25% and 26% increase, respectively, in the cost of exporting goods to the U.S.

The SPDR DJ Euro STOXX 50 ETF (FEZ  ) dipped 0.9%, while the iShares South Africa Index Fund fell 4.5%.