Stock markets in the US and Asia experienced sharp declines as investors grappled with growing concerns over the economic impact of President Donald Trump’s tariffs.
The uncertainty has sparked fears of a potential recession, leading to a sell-off in major indices and tech stocks.
US Markets Take a Hit
On Monday, the S&P 500, which tracks the largest US companies, fell by 2.7%, while the Dow Jones Industrial Average dropped 2%.
The tech-heavy Nasdaq was hit particularly hard, plunging 4%. Shares of Tesla plummeted by 15.4%, and AI chip giant Nvidia fell more than 5%. Other major tech stocks, including Meta, Amazon, and Alphabet, also saw significant declines.
Trump’s recent comments about the economy being in a “period of transition” have added to investor anxiety.
In a Fox News interview, the president acknowledged concerns but emphasized his efforts to bring wealth back to America.
Asian Markets Follow Suit
On Tuesday, Asian markets initially fell sharply before recovering slightly. Japan’s Nikkei 225 closed down 0.6%, while South Korea’s Kospi ended 1.3% lower.
The dollar also slid further against the pound and the euro, continuing its decline since the beginning of the month.
Europe Remains Stable
In contrast, European markets showed little sign of turbulence. The UK’s FTSE 100 and Germany’s Dax opened flat, while France’s Cac 40 opened slightly higher.
Investor Sentiment Sours
Analysts attribute the market volatility to uncertainty surrounding Trump’s tariff policies.
“Trump is keeping political leaders and investors guessing, and that’s reflected in the dire market mood,” said Tim Waterer, chief market analyst at KCM Trade.
Ruth Foxe-Blader of Foxe Capital described Monday as a “very difficult and chaotic day for the stock market in the US,” noting that investors are reacting to Trump’s policies while also selling overvalued tech stocks.
Tariffs and Economic Concerns
Trump’s tariffs, which are taxes on imported goods, have raised fears of higher prices and slower economic growth.
The president introduced the measures to address issues like illegal drugs and migration, but critics argue they could harm the US economy.
Economist Mohamed El-Erian noted that investors initially underestimated the likelihood of a trade war.
“It’s a complete change in what the market expected,” he said, adding that businesses and households are starting to hold off on spending due to uncertainty.
White House Response
Despite the market turmoil, the White House remains optimistic. A spokesperson highlighted “trillions in investment commitments” from industry leaders in response to Trump’s agenda.
Kevin Hassett, an economic adviser to Trump, also pushed back against recession fears, citing strong economic fundamentals and the positive impact of tariffs on manufacturing and jobs.
What’s Next?
As investors adjust to the new reality of Trump’s trade policies, the markets remain on edge.
The coming weeks will be crucial in determining whether the US economy can weather the storm or if the tariff tensions will lead to a prolonged downturn.
