Market volatility spikes due to U.S. tariff changes

US stock market declines amid tariff policy shifts as Trump delays tariffs on Mexico and Canada; recession fears persist.

In Short

U.S. trade policy changes are causing stock market instability, with significant losses in technology stocks and ongoing recession fears. Although there was a slight recovery following tariff announcements, tensions with Canada remain, and major stock indexes continued to decline.

U.S. trade policy changes are impacting market stability once more.

On Thursday, stock prices fell sharply, reversing gains from Wednesday’s rally, despite a partial rollback of tariffs. Technology stocks saw significant declines, and fears of a recession continued to affect financial markets.

Investor concerns are heightened by the uncertainty surrounding tariff policies from the White House, with potential delays and exemptions under consideration. Morning trading showed a slight recovery after Commerce Secretary Howard Lutnick suggested that tariff reprieves might extend beyond the automotive sector. Shortly after, President Trump announced a reduction of tariffs on Mexico.

However, tensions remained as Treasury Secretary Scott Bessent labelled Canadian Prime Minister Justin Trudeau a “numbskull,” indicating that his tough stance could result in increased tariffs on Canadian goods. Trudeau confirmed ongoing discussions with U.S. officials to mitigate the impacts of tariffs on specific sectors.

By midday, major stock indexes had declined, with the Nasdaq Composite nearing correction territory, down over 2%. The Dow Jones Industrial Average fell approximately 500 points, equivalent to a 1.2% drop.

Meanwhile, the European Central Bank lowered interest rates due to tariff concerns and potential military spending increases in the euro zone. The S&P 500 index also decreased by 1.9%.

In global markets, European indexes remained flat while Asian markets experienced gains, particularly in Hong Kong, where the Hang Seng index rose by 3.3%. U.S. Treasury yields increased for the third consecutive session, and Bitcoin hovered around $89,000.