Market Turmoil: Trump's Tariffs Trigger Stock Sell-off in US and Asia

On Monday, stock markets in the US experienced a significant decline, primarily due to rising investor fears regarding the negative economic consequences of President Donald Trump’s tariffs. Following Trump’s recent comments during a TV interview about the US economy being in a “period of transition,” concerns over a potential recession began to circulate among investors. The S&P 500 saw a drop of 2.7%, while the Dow Jones Industrial Average fell by 2%. The tech-heavy Nasdaq was particularly affected, plummeting by 4%. Major tech companies like Tesla and Nvidia also reported substantial losses, with Tesla shares down 15.4%.

Asian markets reacted similarly, with Japan’s Nikkei 225 losing 0.6% and South Korea’s Kospi dropping 1.3%, before experiencing some recovery. Investor sentiment was shaken by Trump’s unpredictable tariff strategy, creating an atmosphere of uncertainty. Analysts noted that investors were selling off tech stocks amid fears of an economic slowdown, compounded by competitive pressures from companies such as Chinese electric vehicle manufacturers.

White House officials attempted to reassure the market by emphasizing divergence between market sentiment and actual business developments, arguing that the latter is more indicative of the economy’s direction. Nevertheless, the overall atmosphere remains tense, as the fears of tariffs leading to increased prices and sluggish growth grip the market. Economists like Mohamed El-Erian pointed out that investors initially underestimated the chances of a trade war and are now recalibrating their expectations in response to these market fluctuations. In contrast, economic adviser Kevin Hassett asserted that there are still reasons to maintain optimism about the economic future, citing benefits from the tariffs, which he claims are bringing manufacturing jobs back to America.