Selling Pressure Is High on the Stock Market as Trump Renews Tariff Fears
Stocks are trending down today and could continue to decline throughout the week as new tariffs are potentially going into effect very soon.
Quick overview
- President Trump announced two new tariff plans targeting BRICS allies and countries with anti-American rhetoric, imposing an additional 10% tariff.
- The stock market reacted negatively, with the Dow Jones, Nasdaq, and S&P 500 all experiencing declines due to tariff fears.
- Despite the recent drops, the stock market has shown strength earlier in the week, with several indices posting gains before the tariff announcements.
- Responses from trade partners are expected this week, but the impact on the stock market may be limited as major trading partners have already been addressed.
President Donald Trump introduced two new tariff plans this week, and the stock market has fallen as a result, creating immense selling pressure and more fear about the future.
Trump issued two additional tariff actions Sunday. One was aimed at BRICS allies and those governments that engage in anti-American rhetoric. They will be hit with an extra 10% in tariffs. Trump also sent out a host of letters to U.S. trade partners letting them know that new tariffs would be on the way.
Trump said that there are simply too many countries to try to negotiate with each of them and prefers to send out letters to speed up the process of creating what he calls “fair trade”.
The Stock Market Suffers
Anytime there are new tariffs announced the stock market takes a dive, and this week is the same old story. The Dow Jones dipped by 0.94% on Monday by the end of trading. The Nasdaq Composite could feel the biggest impact from new tariffs, since they tend to hit tech companies first and the Nasdaq is tech heavy. That stock index fell 0.92%, and the S&P 500 lost 0.79% on Monday as well.
The stock market is healthier than it appears to be, though, despite the drops. Before Monday’s dip, the Nasdaq and S&P 500 stock indices ended four out of five trading sessions in a row with gains. The stock market has rarely been stronger this year, but it is down from last week and could continue to drop as tariff fears persist from day to day.
We will likely hear from several countries this week on their response to Trump’s new tariffs. Their responses will help to inform stock market movement, but investors should keep in mind that the biggest trade partners with the biggest impact on stocks have already been dealt with. Trump has been negotiating deals on tariffs with China, Japan, Mexico, Canada, and much of Europe this year, so the remaining countries will have minimal impact on global import costs compared to those heavy hitters.
The 90-day pause on tariffs that Trump instituted is set to come to a close in about two weeks, and Trump has started to issue his letters for new tariffs ahead of that deadline. Stocks will trend downward leading up to the end of that pause as investors fear how prices will be impacted by those severe tariffs going back into effect. Of course, Trump still has time to extend the deadline and continue to pause his new tariffs or reach deals with the United States’ trading partners.
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