Trump tariff fuels fears of US recession, leading to global stock decline

An anticipated recession in the US, resulting from President Donald Trump’s new tariff, has already created ripples of economic warning waves in the global market, likely weakening US economic growth and triggering panic selling of stocks, continuing the declining trend. Though the White House makes claims of lasting turmoil being unlikely, global stock markets continued their decline.

The S&P 500 dropped by 2.7%, the Dow Jones fell by 2%, and the Nasdaq, dominated by technology stocks, plummeted by 4% on Monday, as investors pulled out of shares in the “magnificent seven” – Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla, with Tesla experiencing a 15% drop, marking its worst day since September 2020.

Following Wall Street’s downturn, Asian markets also fell sharply on Tuesday, as Japan’s Nikkei and Taiwan stocks lost about 3%, reaching their lowest levels since September, while MSCI’s index of Asia-Pacific shares outside Japan declined by over 1%.

Even the Chinese markets, which had shown strong performance this year, were affected, as the blue-chip index dropped by 1%, and Hong Kong’s Hang Seng Index slipped by 1.5%. European markets also seemed set for losses, with DAX futures down 0.8% and Eurostoxx futures lower by 0.9%, suggesting that the selloff was likely to continue.

The market turmoil followed Trump’s remarks on Sunday, where he avoided directly addressing recession concerns, stating that the US economy was in a “period of transition” and that the ongoing economic changes, although significant, would ultimately be beneficial.

On Monday, Kevin Hassett, the head of the national economic council, asserted on CNBC that any uncertainty surrounding Trump’s trade policies would be resolved by early April, while insisting that these policies were leading to job creation in the US. He cited February’s job figures, which showed a 10,000 increase in manufacturing jobs, although this accounted for only a 0.08% rise out of the 12.7 million manufacturing jobs in the country.

Hassett remained optimistic about the economic outlook, arguing that the Trump administration’s agenda of tax cuts, deregulation, and artificial intelligence-driven productivity growth would drive economic expansion while downplaying concerns about trade policy uncertainties. Despite the stock market slump over the past week, Trump and his administration continued to defend their trade policies, actively engaging with media to dismiss fears of a recession.

Since taking office, Trump has intensified trade disputes with America’s largest trading partners, increasing tariffs on China from 10% to 20%, while scaling back on 25% tariffs against Mexico and Canada, though he has warned of potential tariff reimpositions next month. The Atlanta Federal Reserve’s GDP Now tracker projected that the US economy could shrink in the first quarter, mainly due to trade-related factors, though Trump dismissed suggestions that his policies were creating uncertainty.

Commerce Secretary Howard Lutnick reinforced the administration’s stance on NBC’s Meet the Press, stating that there would be “no recession in America” and comparing doubts over Trump’s economic policies to earlier skepticism about his election victory. Predicting strong growth in the next two years, he insisted that the US economy would continue to thrive despite market concerns.