In a dramatic day of market turbulence that saw the Dow Jones plunge over 1,700 points before staging a brief recovery, President Donald Trump remained steadfast in his stance on tariffs despite Wall Street's clear opposition.
The S&P 500 dropped 1.7% in midday trading Monday, continuing its worst weekly performance since the COVID-19 market crash in March 2020. The index flirted with bear market territory, approaching a 20% decline from recent highs set just months ago.
Market chaos erupted after Trump doubled down on his tariff policies over the weekend, threatening additional measures against China in response to their retaliatory tariffs on U.S. goods. Speaking to reporters aboard Air Force One, Trump appeared unmoved by the market reaction, stating that "sometimes you have to take medicine to fix something."
The day's volatility was highlighted when a false rumor about a potential 90-day tariff pause sent stocks briefly soaring, demonstrating investors' desperate hope for any sign of policy reversal. The White House quickly labeled the rumor "fake news," sending markets back into decline.
JPMorgan CEO Jamie Dimon warned in his annual shareholder letter that the tariffs would likely increase inflation and raise recession risks. The policy's impact rippled globally, with Hong Kong's market suffering its worst single-day decline since 1997, plummeting 13.2%.
U.S. companies with significant Chinese exposure felt particular pain, with Nike dropping 6.1%. The sportswear giant's vulnerability stems from its heavy reliance on Chinese manufacturing, which produces 18% of its footwear.
The Federal Reserve faces a complex challenge in responding to the market downturn, as high inflation limits its ability to cut interest rates to stimulate the economy. Unlike previous market crises driven by external factors, this decline stems directly from White House economic policy.
As uncertainty looms over how the expanding trade war will unfold, market experts predict continued volatility ahead as countries respond with retaliatory measures, creating a complex web of negotiations that could take considerable time to resolve.