Senate Democrats criticize President Trump’s tariffs
“He’s taxing penguins, not Putin.” Senate Democrats strongly condemned President Trump’s tariffs.
Markets plummeted following President Donald Trump’s announcement of extensive tariffs on Wednesday, leaving trade analysts and investors astounded.
Economists are warning that Trump’s tariffs increase the likelihood of a recession, with one predicting it will happen.
The selloff wiped out over $5 trillion in market value in the S&P 500 during the two trading days following Trump’s announcement.
The broader economy was already unstable due to concerns regarding Trump’s economic strategies and significant changes introduced by the Republican administration’s trade policies, which could negatively impact consumer confidence.
Here’s what we know about the market developments and potential future implications.
How did the markets perform this week?
The markets initially rose before Wednesday’s tariff announcement but experienced a sharp decline afterward.
The Dow Jones dropped nearly 8%, the S&P decreased by over 9%, and the NASDAQ fell by 10%.
China retaliates with tariffs; Europe to respond
China swiftly retaliated against the new tariffs by stating it would enact reciprocal 34% tariffs on all U.S. imports on Friday.
“This action by the U.S. does not align with international trade regulations, undermines China’s legitimate interests, and is a typical act of unilateral bullying,” stated China’s finance ministry.
Reports from Reuters indicate that the European Union is expected to approve an initial set of targeted countermeasures affecting up to $28 billion of U.S. imports in the next few days.
The European Commission is set to propose a list of U.S. products for additional duties in response to Trump’s steel and aluminum tariffs, rather than broader retaliatory measures.
This list is expected to include items such as U.S. meat, cereals, wine, wood, clothing, as well as chewing gum, dental floss, vacuum cleaners, and toilet paper.
Investors brace for tough times, seek relief
CNBC’s Jim Cramer expressed concern on “Mad Money” Friday, warning that the market’s “self-inflicted devastation” might lead to selloffs comparable to the COVID-19 crash, the dot-com bust of the early 2000s, or, in a worst-case scenario, a 1987-style “Black Monday,” which saw the Dow plunge 22.6% in a single day.
“If the president fails to engage with and reward those countries and companies adhering to trade rules, the likelihood of a 1987-style scenario, where we saw a three-day downward trend followed by a 22% drop on Monday, becomes more credible,” Cramer stated.
Billionaire hedge fund manager Bill Ackman, who supported Trump in the 2024 election, shared on X that he believed the possibility of postponing the tariffs exists.
“If this doesn’t happen, the heightened uncertainty could drive the economy into a recession, potentially a deep one,” Ackman noted.
JP Morgan’s chief economist, Michael Feroli, has predicted a recession triggered by Trump’s tariffs, forecasting an unemployment rate exceeding 5% in the latter half of 2025, as revealed in a client note obtained by Yahoo Finance.
“We now anticipate that real GDP will shrink under the weight of the tariffs,” Feroli stated on Friday.
The firm has projected GDP contractions of 1% in Q3 and 0.5% in Q4.
Trump administration signals no relief on tariffs
Key officials in the Trump administration made it clear across various Sunday talk shows that the tariffs will be implemented and are not up for negotiation.
“The tariffs are coming. The president made that announcement, and he was serious about it. The tariffs are coming,” stated Commerce Secretary Howard Lutnick on CBS’s “Face the Nation.”
Treasury Secretary Scott Bessent echoed this sentiment on NBC’s “Meet the Press.”
“These countries have behaved poorly for a long time; this isn’t something that can be resolved in a matter of days or weeks,” he remarked. “We need to see a clear path forward. After decades of bad conduct, you can’t just erase everything overnight.”
Contributors: Jim Sergent, Carlie Procell, Paul Davidson – USA TODAY; Reuters
