Global Markets into Meltdown?

Stock markets across the US and Asia have tumbled as concerns grow over a potential economic slowdown, fuelled by uncertainty surrounding President Donald Trump’s tariff policies.

Asian markets reacted negatively after a selloff in the US was triggered by Trump’s refusal to dismiss the possibility that his tariffs could push the American economy into recession. When questioned about economic concerns, the president described the situation as a “period of transition,” though he stopped short of making any direct predictions about a downturn. In an effort to reassure investors, senior officials in his administration have since attempted to downplay fears of an economic crisis.

Charu Chanana, an investment strategist at Saxo Bank, noted that the perception of Trump as a “stock market president” is now being reassessed. In a News interview broadcast on Sunday, but recorded on Thursday, Trump acknowledged economic concerns while defending his trade policies, insisting that they were part of a broader effort to restore wealth to the US. However, investors appeared unconvinced, as global markets continued to slide.

On Tuesday morning, Japan’s Nikkei 225 had fallen by 1.7%, South Korea’s Kospi was down 1.5%, and Hong Kong’s Hang Seng Index had dropped 0.7%. Meanwhile, on Wall Street, Monday’s trading session saw significant losses, with the S&P 500 closing 2.7% lower, the Dow Jones Industrial Average down by 2%, and the Nasdaq suffering the sharpest decline at 4%. The technology sector was particularly hard hit, with Tesla’s stock plunging by 15.4% and AI chipmaker Nvidia losing over 5% of its value. Other major tech firms, including Meta, Amazon, and Alphabet, also faced steep declines. Analysts pointed to growing unease over Trump’s unpredictable approach to tariffs, with Tim Waterer, chief market analyst at KCM Trade, observing that both political leaders and investors are now struggling to anticipate his next move. “While talk of a recession may be premature, the mere prospect of it is enough to push traders into a defensive stance,” he added.

Despite these concerns, the White House sought to highlight positive economic indicators. A senior official pointed to a divergence between stock market sentiment and actual business activity, insisting that corporate leaders remain optimistic. White House spokesman Kush Desai reinforced this view, stating that Trump’s policies, including tariffs, had led to “trillions in investment commitments” from industry leaders. However, investor confidence has been shaken. Last week, US stock markets returned to levels seen before Trump’s election victory in November, when investors had initially welcomed his presidency with expectations of tax cuts and deregulation. Now, fears are mounting that his aggressive tariff measures—essentially taxes on imported goods—could drive up prices and stifle economic growth.

Rachel Winter, an investment manager at Killik & Co, warned that Trump’s tariff policies would inevitably fuel inflation. The president justified the measures by accusing China, Mexico, and Canada of failing to curb the flow of illegal drugs and migrants into the US—claims that all three countries have rejected. Economist Mohamed El-Erian pointed out that initial investor enthusiasm for Trump’s economic policies was based on expectations of deregulation and tax reductions, while the risks of a trade war were underestimated. Recent stock market declines, he explained, reflect a reassessment of those assumptions, as signs emerge that businesses and consumers are delaying spending due to uncertainty—raising concerns over future economic growth.

Despite these warnings, Trump’s economic adviser, Kevin Hassett, dismissed predictions of a downturn, arguing that the economy remains strong. Speaking to CNBC, he expressed confidence in the benefits of the tariffs, claiming they were already driving manufacturing and job creation back to the US. “There are a lot of reasons to be extremely bullish about the economy going forward,” he insisted.

With markets continuing to react nervously, investors remain cautious about the long-term impact of Trump’s trade policies and the potential risks to economic stability.

With inputs from agencies

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