Trump Recession Remark Explained: The US stocks plunged on Monday after the US President Donald Trump’s statements that the economy is in a “period of transition” amid escalating trade tensions. Investors feared that his aggressive tariff policies on Canada, Mexico, and China could push the US into recession, leading to widespread uncertainty in global financial markets.
What happened to tech stocks?
Technology stocks were hit hardest in the US market. The Nasdaq Composite suffered its worst day since 2022, tumbling 4%. Tesla shares plummeted 15.4%, while AI chip giant Nvidia lost over 5%. Other tech giants, including Meta, Amazon, and Alphabet, also experienced sharp declines.
A White House official, speaking to Associated Press (AP)attempted to downplay the market reaction, stating, “We are seeing a strong divergence between the stock market’s movements and the actual economic outlook.”
Why Trump’s comments sparked fear
During an interview with Fox NewsTrump defended his trade policies, saying, “It’s a period of transition. We’re bringing wealth back to America.” However, economic analysts warn that rising tariffs could drive inflation and slow growth.
Rachel Winter, an investment manager at Killik & Co, told BBC“The level of tariffs Trump is imposing will inevitably lead to inflation.”
What did Trump say?
The sell-off was triggered after Trump, speaking to Fox Newsrefused to dismiss concerns that his trade policies might cause an economic slowdown. “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,” he said.
Despite mounting concerns, Trump’s administration has defended the economic outlook. White House spokesperson Kush Desai told AP News, “President Trump delivered historic job, wage, and investment growth in his first term, and he is set to do so again.” However, financial analysts warn that the market reaction suggests deepening uncertainty.
Story continues below this ad
How did markets react?
Following Trump’s remarks, the sell-off accelerated:
Wall Street slumps: Tesla’s shares crashed by 15.4%, with major tech firms like Nvidia down more than 5%, Meta, Amazon, and Alphabet also suffering sharp declines.
Asian Markets: According to BBC News, Japan’s Nikkei 225 dropped by 2.5%, South Korea’s Kospi fell 2.3%, and Australia’s S&P/ASX 200 declined by 1.8% in early trading.
According to BBCEconomist Mohamed El-Erian noted that investors initially had high hopes for Trump’s plans to deregulate and cut taxes, but underestimated the likelihood of a trade war.
Story continues below this ad
What’s next for the economy?
With additional tariffs on Canadian steel and aluminium expected this week, investors fear more instability. BBC News reports that market uncertainty is likely to persist, with analysts bracing for further economic turbulence in the coming months.
(with inputs from agencies)
© IE Online Media Services Pvt Ltd
