Trump Tariffs Cause Global Market Meltdown

After a bad Thursday and a worse Friday for global markets, investors continued to hit the panic button on Monday, triggering steep selloffs in Asia and Europe, before the U.S. market also opened deep in the red. The S&P 500 opened 2.4 percent below Friday's close but briefly turned positive within the first hour of trading, as investors were grasping at straws to alleviate the pain. Talks about possible deals negotiated behind the scenes were apparently enough to fuel hopes that the sky high tariffs announced last Wednesday wouldn't stand for long. "Countries from all over the world are talking to us," President Donald Trump said on Truth Social on Monday morning. "Tough but fair parameters are being set." 

The U.S. stock market had its worst two days since 2020 on Thursday and Friday, as investors were trying to digest President Trump’s sweeping tariff announcements from the day before. The surprisingly high additional tariffs – a 10 percent baseline tariff on all imports plus significantly higher rates for countries considered “bad actors” in trade – sent shockwaves around the world, as they threaten to upend the status quo of the global economy in one fell swoop. Given the uncertainty surrounding the situation, we can expect a lot of market volatility in the coming days.

Global markets plummeted in the wake of Trump's "Liberation Day" announcement, as the repercussions of the U.S. turning back time to the early 1900s would be felt everywhere from China to Europe - nowhere more so than in the United States, though. Unsurprisingly, the U.S. stock market was heavily affected by the selloff, as U.S. stocks shed trillions of dollars in market capitalization to end the worst week since the Covid-19 crash in March 2020. 

So far, Trump’s “America First” policies have had a devastating impact on U.S. stocks. The S&P 500 has dropped more than 17 percent since Inauguration Day, as the Trump administration’s policies are widely feared to drive up inflation, erode consumer confidence and possibly cause a recession. When asked about the stock market fallout and the warnings of economists, administration officials have kept repeating that Trump’s policies would eventually help America prosper in the long term. People tend to be rather impatient when they see their retirement savings melt like ice cream in the sun, however, which is why it will be interesting to see if and when some of Trump’s supporters will sour on the president and his protectionist policies.