Trump's tariff turmoil: Markets tumble as tensions rise

After President Trump's latest declarations about raising tariffs, the markets saw substantial drops. According to NBC News, the S&P 500 index fell by 2.8%, the Nasdaq by 3.7%, and the Russell 2000, which tracks smaller company stocks, also by 3.7%. This turmoil extended to Asian markets as well.

In Japan, the Nikkei 225 and Topix indices dropped by over 8%, temporarily halting trading as per local regulations. After reopening, the Nikkei saw a further decline of over 6%, and Australia's S&P/ASX 200 decreased by 5.3%. Even Bitcoin, which had previously resisted such declines, lost 5.6%. Additionally, the price of crude oil fell by 3.7% to just under $60 per barrel, the lowest level since April 2021.

President Trump announced an increase in tariffs on goods from China and other countries, expecting to bring billions of dollars to the U.S. "THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH," Trump posted on Truth Social. "We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold. The Surplus with these Countries has grown during the "Presidency" of Sleepy Joe Biden. We are going to reverse it, and reverse it QUICKLY. Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!" the President assured.

The introduction of tariffs aims to reduce the U.S. trade deficit. However, further market declines have led to criticism from economists and business leaders. NBC News notes that even Elon Musk criticized the tariff policy, which drew a response from Trump's advisor, Peter Navarro, who stated that the billionaire was protecting his own interests.

Tesla and SpaceX have already expressed concerns about tariffs' negative effects on the American economy. Both Musk-owned companies sent a letter to the U.S. trade representative warning about the impact of tariffs and retaliatory measures on their financial performance.

"What CEO and what board of directors will be comfortable making large, long-term, economic commitments in our country in the middle of an economic nuclear war? I don’t know of one who will do so. When markets crash, new investment stops, consumers stop spending money, and businesses have no choice but to curtail investment and fire workers," predicts Bill Ackman, CEO of the Pershing Square investment fund. He adds that the U.S. is heading towards an 'economic nuclear winter'.

Goldman Sachs analysts wrote over the weekend that "tariff pandora's box has been opened." They noted that U.S. actions against China were "much stronger than our economists and most investors anticipated." Analysts predict that the new tariffs could set the American tech industry back by a decade. Dan Ives of Wedbush Securities lowered forecasts for Tesla's stock by 43% and Apple's by 23%. JPMorgan also warned about rising unemployment and a decline in consumer spending.