Global stock markets took a significant hit on Monday, prompting U.S. President Donald Trump to assert that his administration would not consider pausing tariffs, despite concerns that these duties could trigger a global economic slowdown.
In a press conference at the Oval Office, Trump emphasized that many countries were eager to negotiate fair trade deals, which might include high tariffs. He stated, “We’re not looking at that,” referring to a pause in tariffs, and added that both permanent tariffs and negotiations could coexist. He mentioned that some of the negotiations would involve “open borders” with countries like China to secure better trading terms.
The day began with dramatic losses in European and Asian markets. The S&P 500 was down 0.2% amid a day filled with volatility, while the Dow Jones Industrial Average dropped 349 points, or 0.9%. The Nasdaq composite managed a slight increase of 0.1%. This turmoil in the markets raised questions about Trump’s ultimate goals in his trade war. If the aim is to secure trade agreements, he might ease tariffs, but if he intends to keep them long-term, stocks could continue to decline.
Even some of Trump’s supporters expressed concern about the economic fallout. Billionaire investor Bill Ackman warned of an "economic nuclear winter" and suggested a 90-day pause on tariffs to allow time for a fairer tariff system. “The President has an opportunity on Monday to call a time out,” Ackman tweeted.
The sell-off in riskier assets followed Trump’s announcement of increased import taxes and retaliatory measures from China. Trump threatened to impose an additional 50% in tariffs on China if it did not back down from its own planned retaliations. He criticized previous administrations for allowing China to become a wealthy nation at the expense of the U.S.
While Canada avoided the latest round of tariffs, it still faces existing levies on exports like steel and aluminum, which have led to retaliatory tariffs on American goods. The Canadian dollar traded at 70.29 cents U.S., slightly down from the previous day.
In Asia, Japan’s Nikkei 225 index saw a sharp decline of nearly 8%, closing down 7.8%. European markets followed suit, with Germany’s DAX index initially dropping over 10% before recovering somewhat to close down 5.8%. Other major European indices also faced significant losses.
The volatility continued as U.S. futures indicated further weakness. The Dow initially fell as much as 1,700 points but later surged by nearly 900 points before settling back down, reflecting the market’s uncertainty. False rumors of a 90-day tariff pause briefly lifted stocks before the White House dismissed them as “fake news.”
Trump acknowledged the market’s struggles, suggesting that sometimes “you have to take medicine to fix something.” His tariffs are part of a broader strategy to bring manufacturing jobs back to the U.S., although many believe this process could take years.
As financial markets grapple with these developments, investors remain cautious, waiting for more clarity on trade negotiations and the potential impact on the economy. The recent sell-off marks a troubling trend, as markets continue to react to Trump’s trade policies and the ongoing U.S.-China tensions.