The stock market in the United States experienced significant losses following a second day of dramatic turnarounds, highlighting ongoing volatility. On Tuesday, the S&P 500 fell 1.6% after initially rising by 4.1%, nearly achieving a record high. This decline left the index almost 19% below its peak recorded in February. Simultaneously, the Dow Jones Industrial Average saw a reduction of 320 points after an impressive surge of 1,460, while the Nasdaq composite lost 2.1%. The uncertainty surrounding President Donald Trump’s trade war remains prevalent, with a new round of tariffs, including a 104% levy on Chinese imports, poised to take effect after midnight.
In retaliation to U.S. tariffs, Canada plans to implement a 25% import tax on American autos not in compliance with the USMCA, the trade agreement enacted in 2019 during Trump’s presidency. This move, set to commence just after midnight on Wednesday, aims to counterbalance the effects of the U.S. tariffs. Moreover, Canada is preparing for increased auto production and investments domestically and is developing strategies to exempt Campobello Island residents from some tariff measures.
Energy commodity prices fell as early gains dwindled, with U.S. crude oil decreasing 1.8% to $59.58 per barrel and natural gas dropping 5.2%. Most oil and gas companies recorded losses, as Occidental Petroleum fell 6.8%, ConocoPhillips declined 3.5%, and Exxon slipped 2.2%.
UN Secretary-General Antonio Guterres expressed concern over the potential impact of U.S. tariffs on vulnerable developing nations, noting that a resulting trade war could have devastating outcomes. Guterres emphasized a sincere hope to avoid a recession, which would disproportionately affect the world’s poorest communities.
The previously leading U.S. stocks, known as the “Magnificent Seven,” saw additional losses following another market upheaval, with Tesla and Apple shares falling 4.9% and 5%, respectively. The “Magnificent Seven” stocks carry a substantial influence on significant market indices, and since recent major sell-offs, their combined market value has decreased by $2.12 trillion.
In response to President Trump’s newly announced reciprocal tariffs, China has sought World Trade Organization consultations, accusing the U.S. measures of violating trade rules. This complaint marks the initiation of the dispute resolution process, which could lead to a WTO panel if unresolved within 60 days. However, without a fully staffed Appellate Body due to U.S. opposition in 2019, such cases may remain pending.
Cryptocurrency markets mirrored stock movements, with bitcoin falling to around $76,600 after earlier gains. Meanwhile, the Justice Department announced plans to dissolve a team focused on crypto-related crimes, shifting attention from complex cryptocurrency cases.
A survey by the Pew Research Center revealed that increased tariffs on China are widely viewed negatively by Americans, with nearly half believing these measures will harm the U.S. and themselves personally. Democrats largely opposed the tariffs, while Republicans were split, seeing potential U.S. benefits but personal detriments.
Amid global trade tensions, U.S. Trade Representative Jamieson Greer faced criticism from senators, particularly from Republican Sen. Thom Tillis, who voiced concerns over the widespread impact of tariffs. Tillis questioned whom to hold accountable if Americans suffer economically as a result.
Europe forges its own course amidst trade tensions, with Italy’s Prime Minister Giorgia Meloni proposing a “zero for zero” tariff approach to President Trump. Britain’s Prime Minister Keir Starmer advised a cautious approach, signaling readiness for negotiation rather than immediate retaliation.
The U.S. tariffs inspired varied international reactions, with European markets showing resilience through rallies, hoping for diplomatic resolutions. Asian countries including Thailand and Indonesia are also seeking dialogue to mitigate the impact of U.S. tariffs. Treasury yields in the U.S. rose once more, reflecting increased investor confidence and possible inflation expectations.
Global markets saw a rebound, with notable gains in Tokyo, which inspired surges in European stocks and U.S. futures. As the earnings season for major bank reports approaches, investors and analysts remain vigilant about the broader economic outlook amidst tariff-driven uncertainties.
In the business landscape, small business optimism dipped due to the prevailing uncertainties, while sectors like health insurance reaped benefits from government policy adjustments. The dominant stock group, the “Magnificent Seven,” regained ground, supporting market recovery. Commodity prices, particularly for gold, fluctuated in response to these ongoing economic conditions, while industries like denim, represented by Levi Strauss, displayed resilience through strategic pricing decisions.
The intricacies of global trade continue to unfold, with nations such as Sri Lanka and South Africa navigating the implications of heightened tariffs on their economies. In Australia, debates intensify over how best to interact with U.S. administration amidst the tariff discussions, reflecting a worldwide ripple effect from the United States’ trade policies.