The market turmoil sparked by President Donald Trump’s tariff announcements intensified on Monday, as he signaled no intention of retreating from his assertive trade policies despite escalating concerns about a global recession.
Equity markets experienced significant declines: S&P 500 futures dropped 2.8%, Nasdaq futures fell 3.1%, and Hong Kong’s Hang Seng index plummeted over 13%, marking its steepest single-day fall this century. European stocks also suffered, with the Stoxx Europe 600 index down 5.3%, Germany’s DAX falling 5.4% after briefly plunging more than 10% at the open, and the FTSE 100 decreasing by 4.6%. Reuters
Goldman Sachs increased the probability of a U.S. recession from 35% to 45%, citing “a sharp tightening in financial conditions” following the imposition of broad tariffs on U.S. trading partners.
President Trump defended the tariffs, stating, “We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold.” He likened the market declines to “taking medicine to fix something.” Reuters
China responded with retaliatory duties of 34% on U.S. imports. The escalating trade tensions led to a $6 trillion loss in market value over two days, marking the worst week for the S&P 500 since the onset of the COVID-19 pandemic in 2020. AP NewsNew York Post+1New York Post+1
Prominent investors expressed concerns: Billionaire Bill Ackman warned that Trump’s tariffs risked plunging the U.S. into a “self-induced, economic nuclear winter.” Hedge fund investor Stanley Druckenmiller opposed tariffs exceeding 10%.
Safe-haven assets saw increased demand, with the benchmark 10-year U.S. Treasury yield falling to 3.98%. Commodities also faced heavy losses; West Texas Intermediate crude dropped 3.3% to $59.96 a barrel, and Brent crude declined 3.1% to $63.58.
Treasury Secretary Scott Bessent downplayed the market reaction, describing it as “short-term” and affirming that the administration would “hold the course” on its trade policies.
The question arises: Is a recession an unintended consequence of these trade policies, or is it part of a broader strategy by the administration?
