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- Trump’s tariffs contributed to a 0.3% GDP shrinkage in Q1, with rising imports and slowed consumer spending.
- Trade tensions and tariff implementations have continued to be a cause of unpredictability in the financial markets.
- S&P 500 dropped by 11%, reacting to Trump’s reciprocal tariffs decision, which ranked him as one of the worst presidents within the first 100 days.
US equities finished mixed on Wednesday as the market remains anxious over President Trump’s stance on economic policies. The S&P 500 index increased by 0.15%, while the Nasdaq Composite index decreased by 0.086%. Also, the Dow Jones Industrial Average rose 141 points after the data revealed that the US economy entered its first recession of the fourth quarter of 2022.
The data from the U.S. Commerce Department show that the first quarter growth-adjusted rate of GDP declined at the rate of 0.3 percent. This was a decline from the previous quarter, which recorded 2.4% growth in its GDP. It has been primarily due to the import that experienced a 41% increase as companies tried to purchase products before the new tariffs imposed by the Trump administration. Consumer spending also declined at a slower pace, while government expenditure also reduced. Therefore contributing to the slow growth of the economy.
Earlier in the month, markets had some relief signal after Trump’s delay on some tariffs and have also shown the possibility of future trade with India. However, this optimism was cut short by a realization of feeble economic indicators and the inflation factor. The effect of trade relations was another source of volatility for the markets due to the ongoing trade relations negotiations.
Trump’s Response to Market Decline
Trump’s speech on April 2 regarding the introduction of reciprocal tariffs also led to volatility in the market. The movement of the S&P 500 index was affected and reduced by over 11% after the announcement. To avoid owning up to the results, he had to release a post on his Truth Social page to counterclaim and say, “This is Biden’s Stock Market, not Trump’s.” He blamed the low figures on a Biden Overhang and asked for more time. Asserting that he was a man of change with many good policies to offer.
The stock market just experienced one of the worst first 100 days for any president in modern history during Trump’s second term. Evaluations also indicate that the prolongation of tariff policies has negatively impacted the market. “This is very clearly brought on by the uncertainty surrounding the tariffs, period,” said a financial analyst at Sound View Wealth Advisors, Kelly Bouchillon.
Multinational firms have also been equally dragged into the effects of the trade market policies implemented by Trump. First Solar Company and GE HealthCare released new estimates. Citing that changes were due to difficulties arising from the imposition of tariffs. Nvidia’s shares also declined further after Super Micro Computer reported lower-than-expected revenues and profits. Thus, economic activity remains uncertain due to ongoing trade tensions.
