New Twist: Wall Street Falls After Trump Postpones Tariffs

The Dow Jones index weakened by 0.99 percent, to 42,579 points, while the S&P 500 plummeted by 1.78 percent, to 5,738 points, and the Nasdaq index fell by 2.61 percent, to 18,069 points. The sharp decline in the indices is a result of investor uncertainty regarding the trade policy of U.S. President Donald Trump.

After deciding the day before to postpone tariffs on cars imported from Canada and Mexico for a month, Trump yesterday postponed tariffs on all goods covered by the North American trade agreement for another month. Initially, Trump mentioned the postponement only for Mexico during the day, but the amended tariff order also includes Canada.

Of the 11 major sectors of the S&P 500 index, stock prices fell in 10 yesterday, with only the energy sector seeing an increase. The Nasdaq index sharply declined as shares of several large technology companies came under pressure, diving into correction territory, more than 10 percent below its record level reached in mid-December.

– Unfortunately, the confusion is growing. A lot of conflicting information is coming in: tariffs are being imposed, tariffs are being postponed, some tariffs are being applied, and some are being exempted… The uncertainty created by sudden changes in political messaging can harm investments and the entire economy. Moreover, high tariffs could raise inflation, explains Mark Malek, a director at SiebertNXT.

Due to high inflation, the U.S. central bank may keep interest rates at current levels longer than expected, even as economic growth slows.

In European markets, however, stock prices rose yesterday after the European Central Bank cut interest rates by another 0.25 percentage points to stimulate growth in the eurozone economy. Indeed, the London FTSE index slipped by 0.83 percent, to 8,682 points, but the Frankfurt DAX rose by 1.47 percent, to 23,419 points, and the Paris CAC increased by 0.29 percent, to 8,197 points.