Wall Street teetered Monday as President Donald Trump pressed forward with aggressive tariffs that are roiling the global economy with no end in sight, leaving investors increasingly unsure about what’s to come.
U.S. markets whipsawed as investors grasped for any shred of news that indicated Trump would relent on his tariffs plan. Even a widely circulated but false headline saying the president was considering a 90-day pause sent markets skyrocketing for a brief time. The White House debunked the news, and stocks again slipped into the red for a time.
At around 2 p.m., with two hours left in the trading day, the S&P 500 and the tech-heavy Nasdaq were positive, although it was unclear what was driving the rally.
The green came after the S&P had opened down 4%, falling below 20% from its most recent high and entering “bear market” territory.
This comes after major indexes in Europe and Asia opened to a sharp fall and automatic circuit breakers triggered in some places to stop stocks from crashing. Even the price of bitcoin, which showed signs on Friday of having resisted the wider market downturn, fell as much as 1.2%. Over the weekend, it dropped more than 7%.
It signaled another excruciating week of turmoil, on top of the market’s two-day tumble last week that wiped out $6.6 trillion, and drawing criticism and raising questions over just how far down the White House would be willing to let the markets free-fall in Trump’s quest to bring other nations to heel.
The convulsions in financial markets have not been a response to the imposition of tariffs — most presidential administrations have enacted them in one form or another — but rather to the scale of what the Trump administration has proposed, and the inconsistent messaging surrounding them.
Trump has sought to upend an entire economic order that revolves around free trade and the U.S. transition to a service-oriented economy from a manufacturing-intensive one.
Baseline 10% tariffs took effect Saturday, with dozens of countries facing higher so-called reciprocal tariffs beginning Wednesday. China said Friday it would impose a 34% tariff on all goods imported from the United States beginning this Thursday, after the U.S. tariffs are set to rise on Chinese goods — from 20% to at least 54%.
The president didn’t seem to be letting up anytime soon; on Monday he threatened China with an additional 50% tariffs by Wednesday if it didn’t rescind its retaliatory measures. The White House later clarified it would mean 104% total.
“Additionally, all talks with China concerning their requested meetings with us will be terminated!” Trump posted on Truth Social.
Trump told reporters on Air Force One on Sunday evening that he wasn’t concerned about the massive market sell-off, adding that “sometimes you have to take medicine to fix something.” The White House on Monday sent out a news release seeking to highlight what it said was growing support for Trump’s plan.
And Trump himself tried to portray his strategy as winning, claiming in a social media post that “Countries from all over the World are talking to us.”
He said he’d spoken with Japan’s prime minister, who was sending a team to negotiate. “They have treated the U.S. very poorly on Trade. They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other ‘things.’ It all has to change, but especially with CHINA!!!”
Yet the overwhelming consensus among economists and high-profile business executives has been that the tariffs are a huge mistake. Goldman Sachs analysts likened them to “Pandora’s box,” adding that the U.S. action against China in particular was “substantially higher” than what most investors had expected.
And criticism from within Trump’s orbit — rare these days — is growing. Sens. Ted Cruz, R-Texas, and Rand Paul, R-Ky., have both publicly argued against the tariffs.
“One person can make a mistake and guess what — tariffs are a terrible mistake,” Paul said last week.
Even Elon Musk over the weekend criticized White House top trade adviser Peter Navarro for defending the tariffs. And the Tesla CEO — and world’s richest man — on Monday shared a video of economist Milton Friedman, who was speaking about the benefits of importing goods and of free trade.
Navarro shot back in an interview Sunday that Musk was “simply protecting his own interests.” But Musk’s interests aren’t particularly different from those of any of the many businesses that rely on the modern global economic system and its cross-border supply chains. Tesla, alongside SpaceX, last month submitted a letter warning the U.S. trade representative of the impact of tariffs and the threat of retaliatory ones to its bottom line.
Hedge fund investor Bill Ackman, an ardent supporter of Trump’s 2024 campaign, posted on X that if the president stays his current course, “we are heading for a self-induced, economic nuclear winter, and we should start hunkering down.”
In the meantime, at least one banking giant is already forecasting that unemployment is poised to climb from 4.2% to 5.3% and for the economy to contract.
Early Monday, JPMorgan CEO Jamie Dimon released his annual letter to shareholders and called for the tariffs impasse to be resolved quickly while warning about the overall inflationary environment in the economy.
“Whatever you think of the legitimate reasons for the newly announced tariffs — and, of course, there are some — or the long-term effect, good or bad, there are likely to be important short-term effects,” Dimon said. “We are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products.”
Trump pointed to falling oil and food prices and declining interest rates while claiming, inaccurately, that “there is NO INFLATION,” and calling for the Federal Reserve to cut rates.
“Our past ‘leaders’ are to blame for allowing this, and so much else, to happen to our country,” he wrote.
In fact, the declines in prices Trump mentioned have largely been a function of weakening economic growth.
While there were signs of slower activity as the Biden administration wound down, the uncertain business environment Trump has created has helped to curtail consumer and business sentiment, while overall price growth has continued to linger. As a result of that stubborn inflation, consumer borrowing rates have not changed much — contradicting Trump’s assertion.
