Wall Street is experiencing significant turmoil following President Donald Trump’s recent intensification of trade tensions, which has led to a sharp decline in the US stock market — the indices dropped around 10 per cent from their peak just weeks prior. The S&P 500 fell by 1.4 per cent during afternoon trading as Trump announced plans to hike tariffs on steel and aluminium imports from Canada, increasing the figure to 50 per cent. This decision follows retaliatory actions from Canada in light of Trump’s tariff threats.
As of early afternoon, the Dow Jones Industrial Average was down 1.6 per cent, having lost 678 points, while the Nasdaq composite saw a decrease of 1 per cent. The S&P 500 was perilously close to what Wall Street describes as a “correction”, sitting within 0.1 percentage points of that threshold. These fluctuations have become frequent, with the S&P 500 experiencing at least seven swings of 1 per cent or more in just eight days. These market dynamics reflect growing investor uncertainty regarding the degree of economic pain Trump is willing to inflict through his tariff policies.
At a press event announcing the tariff increase, Trump suggested Canada should consider becoming the “Fifty First State,” remarking that such a change would eliminate tariffs altogether. The ongoing unpredictability of these tariffs has instilled apprehension among US consumers and businesses, potentially pushing them towards a state of economic stagnation as rising consumer prices and international trade disruptions loom.
Companies are already feeling the repercussions. For example, Delta Air Lines reported a noticeable decline in customer confidence affecting flight bookings, leading the airline to halve its revenue growth forecast for early 2025. Meanwhile, despite a challenging period for Southwest Airlines, its stock surged 8.5 per cent after announcing new customer initiatives. Conversely, Oracle’s shares dropped 5 per cent following disappointing earnings results.
While some tech giants are stabilising, achieving slight recoveries, the overall tech sector has faced considerable volatility. Notably, Tesla’s stock rose 1.6 per cent after Trump expressed support for the company, though it remains down significantly year-to-date. Other major players like Nvidia have also seen modest rebounds, even as they wrestle with ongoing market declines.
International markets have mirrored these trends, with events in the US affecting confidence and trading volumes abroad. European and Asian indices broadly recorded losses, although mainland China’s index showed slight gains amid governmental efforts to boost a slowing economy.
Treasury yields steadied after recent declines; the yield on the 10-year Treasury rose slightly. Reports indicate that the job market remains resilient, with 7.7 million job openings as of January, providing a glimmer of stability in an otherwise precarious economic environment.