Stock markets in the United States and Asia faced sharp declines following concerns about the economic impact of President Donald Trump’s new tariffs. The measures, introduced in response to alleged inaction by China, Mexico, and Canada in stopping the flow of illegal drugs and migrants into the US, have spooked investors.
In the US, major indices ended Monday’s trading session deep in the red. The S&P 500 dropped 2.7%, while the Dow Jones Industrial Average fell 2%. The Nasdaq, heavily weighted with technology stocks, took the biggest hit, plunging 4%. Among the biggest losers were Tesla, which saw its stock plummet 15.4%, and Nvidia, which lost over 5%.
Asian markets followed suit, with Japan’s Nikkei 225 falling 1.1%, South Korea’s Kospi down 1.2%, and Hong Kong’s Hang Seng Index slipping 0.8% by Tuesday afternoon. The sell-off reflects mounting investor anxiety over the possibility of a global economic slowdown triggered by Trump’s trade policies.
Trump, in a recent Fox News interview, acknowledged concerns about the economy but framed the situation as a “period of transition.” He claimed that his policies were aimed at “bringing wealth back to America.” Despite his reassurances, investors remain wary. Analysts argue that the tariffs could lead to increased costs for businesses and consumers, fueling inflation and slowing growth.
“The level of tariffs that Trump is imposing will inevitably cause inflation somewhere down the line,” said Rachel Winter, an investment manager at Killik & Co. Some economists believe that businesses and households are already holding off on spending due to the uncertainty surrounding the trade policies.
While the White House has sought to ease investor fears, the market reaction suggests a growing skepticism about Trump’s economic strategy. Investment strategist Charu Chanana noted that the perception of Trump as a pro-business leader is being reconsidered.
Meanwhile, economic adviser Kevin Hassett defended the administration’s approach, claiming that tariffs were already stimulating domestic manufacturing and job creation. However, economists like Mohamed El-Erian caution that the market is adjusting its expectations amid fears of a prolonged trade war.
As investors brace for further developments, global markets remain on edge, reflecting deep uncertainty about the long-term economic outlook under Trump’s tariff policies.
