Global markets tumble for 3rd day as Trump remains committed to tariffs
CBC
Wall Street is pointing toward major losses on Monday, following enormous declines last week, as fears mount that U.S. tariffs announced by President Donald Trump will slow global economic growth.
European and Asian shares tumbled sharply, while the leading U.S. index flirted with bear market territory before the opening bell.
Futures for the S&P 500 tumbled 2.7 per cent in pre-market trading on Monday, while futures for the Dow Jones Industrial Average slipped 2.4 per cent. Nasdaq futures fell three per cent. All three indexes recouped some of their overnight losses, when the S&P 500 was headed toward bear market territory — defined as a fall of more than 20 per cent from the peak. The index was off 17.4 per cent as of the end of last week.
The massive sell-off in riskier assets at the start of the trading week follows President Donald Trump's announcement of sharply higher U.S. import taxes and retaliation from China that saw markets fall sharply Thursday and Friday.
Late Sunday, Trump reiterated his resolve, saying, "sometimes you have to take medicine to fix something."
Some countries, South Korea and Pakistan among them, said they were sending trade officials to Washington soon to try to seek clarity.
However, Germany's economy minister, Robert Habeck, was defiant as he arrived at a meeting of European Union trade ministers in Luxembourg, saying the premise of the wide-ranging tariffs was "nonsense" and that attempts by individual countries to win exemptions haven't worked in the past.
It's important for the EU to stick together, he said. That "means being clear that we are in a strong position — America is in a position of weakness."
Trump has justified the tariffs as a matter of addressing American trade deficits — which most economists say is not a sign of economic health in and of itself. In the case of Canada and Mexico, he has sought to use tariffs to try to curb the flow of fentanyl into the U.S., even though drug interdictions from Canada into the U.S. are relatively low.
JPMorgan Chase CEO Jamie Dimon, in his much-read annual note to shareholders early Monday, cautioned investors that the turmoil caused by U.S. tariffs and a global trade war could slow growth in the world's largest economy, spur inflation and potentially lead to lasting negative consequences.
"The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse," the CEO wrote.
JPMorgan's economists raised the risk of a U.S. and global recession this year to 60 per cent from 40 per cent after Trump unveiled the steepest trade barriers in more than 100 years last week.
Dimon in January said critics of Trump's tariffs needed to "get over it," though he did allow at the time they would have to be implemented carefully.
The U.S. Federal Reserve could cushion the blow of tariffs on the American economy by cutting interest rates, which Trump in a social media post early Monday argued for. That can encourage companies and households to borrow and spend. But Fed chair Jerome Powell said Friday that the higher tariffs could drive up expectations for inflation and lower rates could fuel still more price increases.
