Stock markets globally fell sharply yesterday after President Trump's remarks suggested potential for a recession tied to his trade policies. The S&P 500 experienced its most significant daily decline in months, dropping 2.7%. This market reaction followed Trump's interview where he indicated uncertainty in economic transitions and hinted at the possibility of further tariffs. Several retaliatory tariffs against the U.S. came into effect, exacerbating investor concerns. Analysts at JPMorgan Chase warned of a higher risk for a global recession, estimating a 40% chance of downturn due to U.S. policy extremes.
The market volatility is much less about the bad news of tariffs and much more about the uncertainty of tariffs, especially uncertainty as to what the policy is, where it is headed, how long it will last and what the end result will be.
Investors were reacting to an interview aired on Sunday in which Trump described a period of transition for the U.S. economy and suggested more tariffs might come.
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