Experts claim that the continuous changes in US trade policy are still causing market volatility and economic uncertainty. Following lower-than-expected economic figures that suggested President Donald Trump’s policies may hurt US corporate activity, stocks fell sharply on Friday. The Dow Jones Industrial Average and S&P saw their most significant one-day drops since December 18, 2023, each down 1.7%. The Nasdaq composite fell 2.2% in the meanwhile.
Business Activity is Almost at A Standstill:
According to an S&P Global study, corporate activity in the US has drastically dropped, with growth slowing to a 17-month low. Specifically, the services sector had an unanticipated decrease. Increasing skepticism about Trump’s intentions, such as possible additional tariffs and domestic expenditure cuts, was seen by many firms polled as a central depressant.
Chris Williamson, business economist at S&P Global Market Intelligence, says, “Businesses express broad concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments.” “Uncertainty is reportedly hurting sales, and prices are going up due to supplier price increases brought on by tariffs.”
A University of Michigan study revealed that customers were preparing for higher prices due to potential tariffs, adding to the market’s pressure from inflation worries. Because importers are subject to tariffs, big retailers like Walmart frequently raise prices by passing these expenses on to customers.
Businesses are becoming increasingly concerned about the administration’s policies, as seen by the recent decline in business activity recorded by S&P Global. Although there was some initial excitement after Trump’s win, worries about trade, expenditure cutbacks, and regulatory uncertainty have eclipsed promises for a business-friendly atmosphere. EReports of lower-than-expected results on house sales and consumer confidence further dampened economic outlooks
Recently, the Trump administration postponed a 25% tax on imports from Mexico and Canada until March and placed a 10% duty on imports from China. Tariffs on aluminum and steel have also increased to 25%. Trump also alluded to levying 25% taxes on pharmaceuticals, electronics, and automobile imports.
Meanwhile, budget cuts from the newly established Department of Government Efficiency (DOGE), headed by billionaire Elon Musk, have caused thousands of jobs to be lost due to federal government expenditure reductions, especially in the scientific and environmental areas. Lower rates can potentially boost the economy but may also increase inflation by promoting spending. Treasury rates fell after Friday’s weaker-than-expected economic news. The bond market dropped sharply as the 10-year Treasury yield dropped from 4.51% to 4.41%. Experts say continuous policy changes are still causing market volatility and economic uncertainty.
