US stock markets drop as Trump doubles down on tariffs, escalating trade tensions with Canada and the EU
US President Donald Trump reaffirmed his commitment to imposing tariffs on foreign goods Thursday, stating he would not yield on the issue, according to CNBC.
Speaking during an Oval Office meeting with NATO Secretary General Mark Rutte, Trump said, “I’m not going to bend at all,” underscoring his stance on trade barriers.
Trump emphasized his plan to enforce “reciprocal tariffs” on nations imposing restrictions on US goods, with the White House confirming that these tariffs would take effect on April 2.
He specifically criticized Canada, calling for the US to absorb its northern neighbour as the “51st state,” adding, “We don’t need anything they have.”
He acknowledged potential disruptions but assured they would be temporary.
His remarks came as major US stock indexes continued their decline, with the S&P 500 falling 10 percent from recent highs, entering correction territory.
Analysts and business leaders have cautioned that Trump’s tariff policies, along with his unpredictable approach, are creating instability in the markets.
According to Barron’s, Ed Yardeni of Yardeni Research reduced his S&P 500 price target for 2025 to 6,400 from 7,000, citing the impact of the tariffs as a contributing factor.
Despite warnings, Trump continued issuing new tariff threats throughout the week.
After US tariffs on steel and aluminum imports took effect Wednesday, the European Union announced a 50 percent tariff on American whiskey and other US products in retaliation.
In response, Trump threatened 200 percent tariffs on EU alcohol exports, including all wines and French champagnes, unless the EU withdrew its countermeasure.
Earlier in the week, Trump also threatened to double tariffs on Canadian steel and aluminum, following Ontario’s decision to impose a 25 percent tax on electricity exports to the US.
However, Ontario Premier Doug Ford paused the countermeasure hours later, leading Trump to back off from his threat, as per The New York Post.
US Commerce Secretary Howard Lutnick defended the administration's trade policies, stating that the tariffs are “worth it” even if they lead to a recession, emphasizing their role in producing revenue, growth, and new factories in America.
The escalating trade tensions have prompted some investors to consider global opportunities beyond US stocks.
According to MarketWatch, Keith McCullough, CEO of Hedgeye Risk Management, advises diversification to manage risks from US market volatility.
He recommends investing in precious metals, US Treasurys, high-yield bonds, and international equities. McCullough highlights opportunities in Europe and parts of Asia.
