Stocks Sink as Trump’s Tariff Threats Weigh on Confidence
"Markets around the world tumbled as investors braced for market turmoil. The S&P 500 is on track for its worst month since 2022.
Stocks around the world tumbled Monday as investors braced for a week of market tumult caused by the expected announcement of yet more tariffs by President Trump on America’s biggest trading partners.
The S&P 500 fell more than 1 percent at the start of trading, extending recent losses. The index is on track for its worst month since September 2022, on concerns that Mr. Trump’s tariffs could recharge inflation and dampen consumer sentiment.
Since taking office a little over two months ago, Mr. Trump has kept investors and companies guessing with a haphazard rollout of what he calls an “America First” trade policy. He has threatened, imposed and in some cases then paused the start of new tariffs on goods coming into the United States.
Whiplash over trade policy has fueled market volatility in the first quarter of the year. Mr. Trump’s next round of tariffs, set to be unveiled on Wednesday, is looming large, risking more swings until investors have the clarity they are seeking, analysts said.
“That’s what the market is hoping for after April 2: Give us what you’re going to give us, tell us what’s going to happen and we will then try to figure it out,” said Steve Sosnick, the chief strategist at Interactive Brokers. “But until then, it’s very difficult to invest.”
The technology-heavy Nasdaq Composite index dropped roughly 2.3 percent in early morning trading.
On Monday, stocks in Japan and Taiwan fell more than 4 percent, while share prices in South Korea were down 3 percent. The Nikkei 225 index in Japan fell into a correction, down 12 percent from its high in late December. Technology companies were hit hard: Chipmakers Taiwan Semiconductor Manufacturing Company, SK Hynix, Samsung and Tokyo Electron recorded declines.
Losses in China were more muted. Hong Kong stocks dropped more than 1 percent and those in mainland China were about 0.5 percent lower. Mainland stocks got some support from a report signaling that China’s export-led industrial sector continues to expand despite Mr. Trump’s initial tariffs.
Markets in Europe slumped, with the Stoxx 600 index falling 1.5 percent. German automakers, which are particularly exposed to U.S. tariffs, extended recent losses: Volkswagen, Europe’s largest carmaker, fell 3 percent in Frankfurt.
Analysts at Goldman Sachs cut their forecast for the S&P 500, citing “higher tariffs, weaker economic growth, and greater inflation than we previously assumed” in a note on Sunday. They expect the index to fall a further 5 percent in the next three months. The downturn could be deeper if the U.S. economy slipped into recession, which the analysts give a roughly one-in-three probability.
Investor anxiety has been reflected in other markets. The price of gold hit another record high, trading at around $3,150 per ounce on Monday. Gold is often sought by investors during times of turmoil. Traders also parked money in relatively safe U.S. government bonds, pushing the yield on the 10-year Treasury note below 4.2 percent.
Mr. Trump has imposed tariffs to make imports more expensive in industries like automobiles, arguing that the trade barriers will spur investment and innovation in the United States. He has also used tariffs, and their threat, to try to extract geopolitical concessions from countries. He has further unnerved investors by saying he does not care about the fallout of his actions on markets or American consumers, who will have to pay more for many goods if import prices rise.
Over the weekend, Mr. Trump ramped up the pressure, threatening so-called secondary sanctions on Russia if it does not engage in talks to bring about a cessation of fighting in Ukraine. The tactic echoes similar sanctions concerning Venezuela. He said last week that any country buying Venezuelan oil could face another 25 percent tariff on its imports to the United States.
The threats over the weekend come on top of tariffs of 25 percent on imported cars and some car parts set to be put in place this week, barring any last-minute reprieve. That’s in addition to previously delayed tariffs on Mexico and Canada, as well as the potential for further retaliatory tariffs on other countries.
Adding to investors’ angst is the scheduled release on Friday of the monthly report on the health of the U.S. jobs market. It could provide another reading of how the Trump administration’s policy pursuits are weighing on the economy.
“I hear it from nearly every client, nearly every leader — nearly every person — I talk to: They’re more anxious about the economy than any time in recent memory,” Laurence D. Fink, the chief executive of the asset management giant BlackRock, wrote on Monday in his annual letter to investors. “I understand why. But we have lived through moments like this before. And somehow, in the long run, we figure things out.”
Keith Bradsher and Jason Karaian contributed reporting.
Joe Rennison writes about financial markets, a beat that ranges from chronicling the vagaries of the stock market to explaining the often-inscrutable trading decisions of Wall Street insiders. More about Joe Rennison
Danielle Kaye is a business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers. More about Danielle Kaye"
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