Stock markets in the United States and Asia have fallen amid mounting concerns over the economic fallout of President Donald Trump’s tariffs.
The market slump came after the president said in a television interview that the world’s largest economy was in a “period of transition,” responding to questions about the possibility of a recession.
Since the interview aired on Sunday, senior Trump officials and advisers have moved to reassure investors.
“The previous notion of Trump being a stock market president is being re-evaluated,” said Charu Chanana, an investment strategist at investment bank Saxo told the BBC.
In a Fox News interview broadcast over the weekend but recorded last Thursday, Trump appeared to acknowledge growing unease about the economy. “I hate to predict things like that,” he said. “There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.”
Market reactions were swift across Asia, with Japan’s Nikkei 225 falling 1.7%, South Korea’s Kospi shedding 1.3%, and Hong Kong’s Hang Seng Index declining by 1% in Tuesday morning trading.
According to BBC, a similar downturn was recorded in New York on Monday, where the S&P 500 fell 2.7% and the Dow Jones Industrial Average lost 2%. The Nasdaq suffered the most, dropping 4%.
Tech stocks led the losses. Tesla shares plunged 15.4%, while Nvidia, a leading producer of AI chips, dropped more than 5%. Other major technology companies, including Meta, Amazon and Alphabet, also saw sharp declines.
“Trump is keeping political leaders guessing regarding his next moves on tariffs, but the problem is that he’s also keeping investors guessing, and that’s reflected in the dire market mood,” said Tim Waterer, chief market analyst at financial services firm KCM Trade. “Whilst recession talk may be premature, the mere prospect of this coming to fruition is enough to put traders into a defensive mindset.”
A White House official, speaking after markets closed on Monday, said: “We’re seeing a strong divergence between [the] animal spirits of the stock market and what we’re actually seeing unfold from businesses and business leaders.” The official added, “The latter is obviously more meaningful than the former on what’s in store for the economy in the medium to long term.”
Later in the day, White House spokesman Kush Desai issued a statement noting that “industry leaders” had responded to Trump’s policy agenda, including tariffs, “with trillions in investment commitments.”.
The latest decline in US markets has erased gains since Trump’s election victory, which investors had initially welcomed due to expectations of lower taxes and reduced regulation. But those hopes have been overshadowed by fears that the president’s tariff measures—taxes imposed on imported goods—could trigger higher prices and weaken economic growth.
“The level of tariffs that Trump is imposing, I think no doubt, will have to cause inflation somewhere down the line,” said Rachel Winter, investment manager at Killik & Co, speaking on the Today programme.
Trump has defended the tariffs, claiming they are necessary to combat illegal drug and migrant flows from China, Mexico, and Canada. However, the three countries have rejected the allegations.
Economist Mohamed El-Erian said that while investors initially embraced Trump’s plans for deregulation and tax cuts, they underestimated the risks of a trade war. He explained that recent market losses reflect a shift in sentiment.
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“It’s a complete change in what the market expected,” he said, adding that uncertainty was already prompting businesses and households to curb spending, which could threaten economic growth.
In an interview with CNBC, Trump’s economic adviser, Kevin Hassett, offered a more upbeat view, saying the tariffs were already encouraging job creation and boosting manufacturing in the United States.
“There are a lot of reasons to be extremely bullish about the economy going forward,” he said. He acknowledged some “blips in the data” this quarter, which he attributed to the timing of the tariffs and the “Biden inheritance.”
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