Global markets faced significant losses on Monday after Donald Trump reaffirmed his tough stance on tariffs. This announcement heightened concerns about a potential recession. Stocks dropped sharply, with US futures indicating a 3-4% decline.
The Hang Seng index in Hong Kong plummeted over 10%. European and Asian markets also fell as investors sought safer assets, leading to a decrease in bond yields worldwide.
Goldman Sachs raised the probability of a US recession to 45%. They attributed this to the financial pressure from Trump’s new tariffs. The president defended his tariffs, stating they generate billions and are essential for addressing trade deficits with countries like China and the EU. In response, China imposed retaliatory tariffs of 34%.
The market turmoil resulted in a loss of over $5 trillion from US stocks in just two days, marking the worst week since the pandemic crash in 2020. Even some of Trump’s supporters, including investors Bill Ackman and Stanley Druckenmiller, expressed concerns about the strategy. They warned that it could harm the US’s reputation and economy.
