Trump digs heels in as global markets continue to drop over tariffs

US President Donald Trump remained defiant as global markets continued plunging and fears of a recession grew in the US after his tariff announcement last week.

Wall Street is sinking again, as worries deepen about whether Mr Trump’s trade war will torpedo the global economy.

The S&P 500 was down 3.8% in early trading on Monday, coming off its worst week since Covid-19 began crashing the global economy in March 2020.

The Dow Jones Industrial Average was down 1,200 points, and the Nasdaq composite was 4% lower. Stocks in Hong Kong plunged 13.2% for their worst day since 1997. A barrel of benchmark US crude oil briefly dropped below 60 dollars for the first time since 2021.

The Republican President also called on the US Federal Reserve to lower interest rates.

On Friday, the chair of the US central bank, Jerome Powell, warned that the tariffs could increase inflation, and added “there’s a lot of waiting and seeing going on, including by us”, before any decisions would be made.

Golf

Mr Trump spent the weekend in Florida, arriving on Thursday night to attend a Saudi-funded tournament at his Miami golf course. He stayed at Mar-a-Lago, his private club in Palm Beach, and played golf at two of his properties nearby.

On Sunday, he posted a video of himself hitting a drive, and he told reporters aboard Air Force One that evening that he won a club championship.

“It’s good to win,” Mr Trump said. “You heard I won, right?”

He also said that he would not back down from his tariffs despite the turmoil in the global markets.

“Sometimes you have to take medicine to fix something,” Mr Trump said.

Goldman Sachs issued a new forecast saying a recession has become more likely even if Mr Trump backtracks from his tariffs.

The financial firm said economic growth would slow dramatically “following a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed”.

On Monday, the US President is scheduled to welcome the Los Angeles Dodgers to the White House to celebrate their World Series victory. He is also meeting with Israeli Prime Minister Benjamin Netanyahu, and they are expected to hold a joint press conference later.

Economic turbulence

Mr Trump has strived for a united front after the chaotic infighting of his first term. However, the economic turbulence has exposed some fractures within his disparate coalition of supporters.

Bill Ackman, a hedge fund manager, lashed out at Commerce Secretary Howard Lutnick on Sunday as “indifferent to the stock market and the economy crashing”.

He said Cantor Fitzgerald, the financial firm led by Mr Lutnick before he joined the Trump administration, stood to profit because of bond investments.

On Monday, Mr Ackman apologised for his criticism but reiterated his concerns about Mr Trump’s tariffs.

“I am just frustrated watching what I believe to be a major policy error occur after our country and the president have been making huge economic progress that is now at risk due to the tariffs,” he wrote on X.

Top White House economic adviser Kevin Hassett told Fox News Channel that Mr Ackman should “ease off the rhetoric a little bit”.

He insisted that other countries, not the United States, are “going to bear the brunt of the tariffs”.

Scepticism

Billionaire Elon Musk, a top adviser to Mr Trump on overhauling the federal government, expressed scepticism about tariffs over the weekend. Mr Musk has said that tariffs would drive up costs for Tesla, his electric carmaker.

He said in a video conference with Italian politicians: “I hope it is agreed that both Europe and the United States should move ideally in my view to a zero tariff situation, effectively creating a free trade zone between Europe and North America.”

Mr Musk added: “That certainly has been my advice to the President.”

Peter Navarro, a Trump trade adviser and tariff proponent, later told Fox News that Mr Musk “doesn’t understand” the situation.

“He sells cars,” Mr Navarro said. “That’s what he does.”

He added that Mr Musk was “simply protecting his own interests as any business person would do”.

Higher prices

JP Morgan Chase chief executive Jamie Dimon says the Trump administration’s trade policies will likely result in higher prices for both imported and domestic goods and services, weighing on an already slowing US economy.

In his annual letter to shareholders, released on Monday, Mr Dimon said the US economy already faced a number of challenges: sticky inflation, geopolitical tensions, Federal Reserve policy including still-high interest rates and high fiscal deficits.

Mr Dimon also said that many stocks in the market have been priced too high.

The influential businessman often comments on both domestic and international issues.

“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” Mr Dimon wrote, while also saying: “I still have an abiding faith in America.”