Lasting impacts increased tariffs could have on the U.S. economy
04:02
Stock markets in the U.S. opened sharply lower on Thursday amid mounting investor concerns about slowing economic growth and uncertainty over the impact of new Trump administration tariffs on Canada, China and Mexico.
The S&P 500 fell 83 points, or 1.4%, to 5,759 point shortly after the start of trade, while the blue-chip Dow Jones Industrials Average slid 1.2% and tech-heavy Nasdaq composite tumbled 1.7%.
Recent signals suggest the economy is weakening. Most worrying is a downturn in spending by American consumers, with federal data showing that retail sales across the U.S. dipped 0.9% in January.
The job market is also cooling down, while layoffs in February soared to their highest level since July 2020, according to new numbers from outplacement firm Challenger, Gray & Christmas.
At the same time, inflation accelerated in January and remains stubbornly above the Federal Reserve’s 2% annualized target. Recent economic trends have sparked fears that the U.S. could be headed for a rare bout of “stagflation,” or when the economy and the job market slow at the same time inflation rises. The country hasn’t faced such a period of economic distress since the late 1970s and early 1980s.
Investors are also fretting about a budding global trade war. The Trump administration on Tuesday announced 25% tariffs on U.S. imports from Canada and Mexico, as well as an additional 10% levy on Chinese imports, which were already taxed at 10%. The barrage of trade measures has raised concerns of higher prices in the U.S. for a range of goods, such as produce and cars.
“Bearish sentiment is at a historical extreme over concerns of economic growth, trade wars and Trump 2.0 policies,” Piper Sandler analysts said in a report.
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