After President Donald Trump announced a 25 % import tax on Tuesday, stifling hopes for a last-minute package and resuming concerns about a trade war, US shares dropped on Monday. As a result of investor reaction to the price increase, the S&, P 500, Dow Jones Industrial Average, and Nasdaq composite all fell 2.6 %, while the S&, P 500, and Dow Jones Industrial Average all fell 1.8 %.
The S&, P 500’s post-Election Day growth rate dropped to just over 1 % from a peak of more than 6 % as a result of the sudden announcement, which erased the majority of the stock market’s gains since Trump’s election. Instead of enforcing taxes, Wall Street had anticipated that Trump would use them as a bargaining chip for upcoming conversations. However, the mayor’s choice to continue irrigated investors who were already hesitant about economic uncertainty.
Markets were hoping for an additional 11th-hour agreement to postpone tariffs, but they won’t be doing so this period, according to Harris Financial Group’s managing partner Jamie Cox. To accept them is the next step. Markets must value that fact, and those figures are “painted dark.”
Trump’s tax news and rationale
Trump made his point clear when he addressed reporters at the White House on Monday:” Tomorrow, tariffs will start 25 % on Mexico and 25 % on Canada.” There is no place left for Mexico or Canada, he added.
Following both nations ‘ pledges of concessions, the leader had first given a one-month pause in February. Trump, however, decided to continue the taxes in response to continued worries over illegal drug trafficking and immigration. In an effort to prevent the tariffs, Mexico extradited some infamous drug lords, including a cartel president wanted for killing a US undercover broker.
Additionally, Trump signed an order boosting a 10 % tariff on Chinese imports to 20 %, citing Beijing’s failure to combat the illicit fentanyl trade.
A report from the Institute for Supply Management ( ISM) on Monday, which showed a slowdown in US manufacturing activity, highlighted the overall economic impact of Trump’s tariffs. As companies grappled with the effects of the business plan change, need decreased, production increased, and job losses persisted.
As participants ‘ companies went through the first operational shock of the new administration’s tax policy, according to Timothy Fiore, chairman of ISM’s manufacturing survey commission.” Need eased, manufacturing stabilized, and destaffing continued,” Fiore said.
Particularly hard hit were wholesale companies and technology. Following the resignation of its CEO, VMware experienced a 3 % decline, while Tesla experienced a 2.8 % decline, and Kroger experienced a 3 % decline. Despite Trump’s announcement of a strategic crypto reserve over the weekend, MicroStrategy and Coinbase both experienced declines in their respective stocks, with MicroStrategy and Coinbase both reporting declines of 1.8 % and 4.6 %.
Trump on the nutrients offer and Ukraine
Trump also criticized Ukrainian President Volodymyr Zelenskyy for his criticism of US support while also discussing tariffs. Trump responded,” Well, I really think he should be more happy because this region has endured through this.” ” Europe may have given them more than we have given them,” he said.
Trump refrained from talking about a US-Ukraine mineral deal, saying,” No, I don’t think so.” Because Biden gave a state 350 billion cash to fight, it is a great deal for us. We receive nothing.
He mentioned the possibility of ending military support to Ukraine, adding,” I haven’t yet talked about that right now. We’ll see what happens, I mean, for the time being. Numerous things are happening at this very moment.
International business reaction and outlook for the future
As consumers sought to secure products before the US tariffs go into effect, China saw an increase in manufacturing directions. In addition, following an inflation report that raised hopes of a European Central Bank rate cut, European markets performed better, with France’s CAC 40 rising 1.1 % and Germany’s DAX rising 2.6 %.
Investors in the US will closely monitor future financial information and Federal Reserve signals. Treasury yields dropped in response to worries about a sluggish business, and market expectations now project at least two rate reductions by the end of the year.
The Fed’s ability to intervene may be constrained, leaving the industry unsure of how financial circumstances may change as escalating trade hostilities increase.
( With input from organizations )
