Wall Street ended largely lower Monday after a wild trading day as President Donald Trump escalated his trade war with aggressive tariffs that have rocked the global economy, leaving investors — and everyone else — unsure about what’s to come.
The S&P closed down 0.2%, while the Dow Jones Industrial average fell 0.9%, or 350 points. The tech-heavy Nasdaq ended the day up 0.1%, led by a rally in chipmaker Nvidia, which finished 3.5% higher.
The U.S. markets spent the day on a volatile seesaw. The S&P opened the day down 4%, falling below 20% from its most recent high and entering “bear market” territory. Then, a widely circulated but false headline that Trump was considering a 90-day tariffs pause sent markets briefly skyrocketing. The White House debunked the news, and stocks again slipped into the red, then briefly rallied again.
The tariff meltdown on Wall Street earned Trump the distinction of having presided over the biggest losses in the S&P 500 of any president’s early term going back to World War II, according to research by CFRA, an independent financial solutions firm.
Trump was unfazed, telling reporters at the White House, “I don’t mind going through it because I see a beautiful picture at the end,” adding that he is “not looking” to pause tariffs, despite the uproar among investors and the business community.
"Tariffs will make this country very rich," he insisted.
Yet Trump's quest to bring other nations to heel is drawing increasing criticism and raising questions over just how far down the White House would be willing to let the markets free-fall. The tumble last week wiped out $6.6 trillion.
Commodities prices fell further overall, with oil closing at $61 a barrel. Copper prices, often an indicator for industrial demand, fell, too.
The convulsions in financial markets have been a response not 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 it.
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%.
Trump 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.
Trump said both that the tariffs may be permanent but that they also may be subject to negotiations — further sowing confusion about his plans.
“We’re going to get fair deals and good deals with everybody,” Trump said from the Oval Office, where he was meeting with Israeli Prime Minister Benjamin Netanyahu. “And if we don’t, we’re going to have nothing to do with them. They’re not going to be allowed to participate in the United States.”
And he continued to say the United States needed to close trade deficits — when countries’ imports exceed their exports — which economists say would mean a massive and potentially impossible reorientation of the U.S. economy.
Trump has tried to portray his strategy as winning. “Virtually every country wants to negotiate," he said Monday.
He said he’d spoken with Japan’s prime minister, who was sending a team to negotiate. He said on Truth Social that "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 chastised White House top trade adviser Peter Navarro for defending the tariffs. Musk, the Tesla CEO and the world’s richest man, shared a video Monday of economist Milton Friedman speaking about the benefits of importing goods and of free trade.
Hedge fund investor Bill Ackman, an ardent supporter of Trump’s 2024 campaign, posted on X that if Trump 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.
In an annual letter to shareholders Monday, JPMorgan CEO Jamie Dimon warned the tariffs would likely boost inflation and weigh down an already-slowing 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 has 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.