U.S. markets were set to open sharply lower as well. President Trump said on Sunday that he would not back off his trade war, reinforcing fears of a global economic downturn.
Stocks worldwide plunged on Monday, and the S&P 500 was poised to drop again, as President Trump doubled down on global tariffs that have made investors increasingly pessimistic about the economy.The main stock index in Hong Kong, where many mainland Chinese companies trade, plunged over 12 percent. In Taiwan, a hub for global technology, stocks were clobbered nearly 10 percent. Japan’s Nikkei 225 index finished almost 8 percent lower, while benchmarks in South Korea tumbled more than 5 percent.
Stocks in Europe opened sharply lower. The FTSE 100 in London and the Stoxx Europe 600 were both down about 5 percent.
The moves reflected deepening concern that Mr. Trump’s significant new taxes on U.S. imports could disrupt global supply chains, cause inflation to accelerate and spark a severe economic downturn.
Wall Street, where financial titans spent the weekend surveying the damage of last week’s sell off, was bracing for more chaos on Monday. The S&P 500, which is already 17.4 percent below its February peak, was nearing a bear market, defined as a drop of 20 percent or more from a recent peak.
The benchmark U.S. index was set to open more than 4 percent lower on Monday, according to futures trading.
Mr. Trump on Sunday evening said that he would not ease tariffs on other countries “unless they pay us a lot of money.” He dismissed concerns that his steep new taxes on imports would lead to higher prices, calling them “a very beautiful thing.”
Here’s what else to know:
- Oil prices: U.S. oil prices briefly dipped below $60 a barrel on Sunday, their lowest level in almost four years, in another sign of concern about a slowing economy. Cheaper oil is generally good for consumers and businesses that use gasoline, diesel and jet fuel. But if prices remain around these levels or fall further, American oil and gas companies are likely to slow drilling, cut spending and lay off workers.
- Cryptocurrency: Since Mr. Trump announced his global tariffs last week, the price of Bitcoin has plunged 10 percent, dropping below $78,000 on Sunday night. The decline shows that Bitcoin, often pitched as a stable long-term source of value, is still subject to the gyrations of the broader market.
- Girding for a trade war: China’s leaders, after retaliating against Trump’s tariffs on Friday, said on Sunday that they were prepared for a trade war with the United States, and that China could potentially come out stronger as a result. The commentary highlights how Beijing hopes to project strength while presenting itself as a responsible global power championing fair trade.
South Korea’s trade minister, Cheong In-kyo, plans to visit Washington this week to try to lower the blanket 25-percent tariff that the Trump administration imposed on goods from South Korea. During his two-day trip, Cheong is expected to meet with administration officials, including U.S. Trade Representative Jamieson Greer, to express South Korean concern about the new duties and seek ways to minimize their impact on South Korea’s export-driven economy, Cheong’s office said.
New tariffs for select trading partners
- E.U. +20% 18.5% –$241 bil.
- China +34% 13.4% –$292 bil.
- Japan +24% 4.5% –$69 bil.
- Vietnam +46% 4.2% –$123 bil.
- South Korea +26% 4.0% –$66 bil.
- Taiwan +32% 3.6% –$74 bil.
- India +27% 2.7% –$46 bil.
- Switzerland +32% 1.9% –$39 bil.
- Thailand +37% 1.9% –$46 bil.
- Malaysia +24% 1.6% –$25 bil.
Notes: Trade balance and import share figures based on 2024 trade data.
Trump’s trade war is raising the bar for the Federal Reserve to lower interest rates
As the rout in financial markets intensified last week, President Trump turned his ire toward the Federal Reserve, which he has pressured to resume interest rate cuts.Credit...Anna Rose Layden for The New York Times
President Trump’s global trade war has significantly raised the bar for the Federal Reserve to lower interest rates, as tariffs risk worsening an already knotty inflation problem while also damaging growth.
Jerome H. Powell, the Fed chair, drove home that message in a hotly anticipated speech that came at the end of a turbulent week as financial markets melted down after Mr. Trump’s tariff plans were revealed.
The measures would lead to higher inflation and slower growth than initially expected, Mr. Powell warned during an event in Arlington, Va., on Friday. He showed concern about the souring economic outlook, but his emphasis on the potential inflationary effect of the new tariffs made clear that it was a significant source of angst.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Mr. Powell said. The Fed’s mandate includes two goals, fostering a healthy labor market and maintaining low, stable inflation.
Before Mr. Trump’s return to the White House, inflation was already proving to be stubbornly sticky, staying well above the Fed’s 2 percent target. Yet the economy had stayed remarkably resilient, leading the central bank to adopt a more gradual approach to interest rate cuts that culminated in it pausing reductions in January. At that policy meeting, Mr. Powell established that the Fed would need to see “real progress on inflation or, alternatively, some weakness in the labor market” to restart cuts.
But with inflation set to soar because of tariffs, it will take tangible evidence that the economy is weakening significantly to get the central bank going again. That could mean that rate cuts are pushed off until much later this year or even delayed until next year if that deterioration takes time to materialize.
“They will not be inclined to be pre-emptive to cut rates to avoid what may be a downturn,” said Richard Clarida, a former vice chair at the Fed who is now a global economic adviser at Pimco, an investment firm. “They’re actually going to have to see an actual crack in the labor market.”
Mr. Clarida said he would look for a “material” rise in the unemployment rate or a “very sharp slowdown, if not a contraction” in monthly jobs growth to account for what he expected would be a significant lurch higher in inflation.
The latest jobs report, which was released Friday, showed that on the eve of Mr. Trump’s latest tariff blitz, the labor market was far from cracking. Employers added 228,000 jobs in March, and the unemployment rate ticked up to 4.2 percent as participation in the labor market rose.
Any enthusiasm about the latest data was quickly overtaken by a torrent of worries about the economic outlook — concerns Mr. Trump’s top economic advisers sought to address on Sunday.
Kevin Hassett, director of the White House National Economic Council, acknowledged that the president’s approach could exacerbate inflation. “There might be some increase in prices,” he said on ABC’s “This Week.” But he insisted that Mr. Trump’s plan would ultimately reverse a long-running trend of importing lower-cost products in exchange for job losses.
“We got the cheap goods at the grocery store, but then we had fewer jobs,” he said.
Scott Bessent, the Treasury secretary, also sought to downplay the prospects of a recession, telling NBC’s “Meet the Press” on Sunday that there would be an “adjustment process.”
Economists across Wall Street are much more gloomy about the outlook. Many have sharply raised their recession odds alongside their forecasts for inflation. Those economists fear that Mr. Trump’s tariffs, which are a tax on imports, will eventually decimate consumer spending, squeeze businesses’ profit margins and potentially lead to layoffs that push the unemployment rate above 5 percent.
Many in this cohort expect the Fed to lower interest rates swiftly as a result, beginning as early as June. Federal funds futures markets reflect a similar approach.
Jerome H. Powell, the Fed chair, said during an event in Arlington, Va., on Friday that he fully intended to serve out all of his term, which ends in May 2026.Credit...Anna Moneymaker/Getty Images
Michael Feroli, chief U.S. economist at J.P. Morgan, is calling for a recession in the second half of this year, with growth declining 1 percent in the third quarter and another 0.5 percent in the fourth quarter. Over the course of the year, he expects growth to fall 0.3 percent and the unemployment rate to rise to 5.3 percent. Even as the Fed’s preferred inflation gauge — once volatile food and energy prices are stripped out — surges to 4.4 percent, Mr. Feroli forecasts that the Fed will restart cuts in June and then lower borrowing costs at every meeting through January until the policy rate reaches 3 percent.
Jonathan Pingle, chief U.S. economist at UBS, has penciled in a percentage point worth of cuts this year even as core inflation reaches 4.6 percent. He expects the unemployment rate to shoot higher this year before peaking at 5.3 percent in 2026. Economists at Goldman Sachs projected that the Fed would deliver three consecutive quarter-point cuts beginning in July.
But there are credible risks to this outlook. The prevailing one is that the inflation shock will be just too enormous for the Fed to look past it by the summer, especially if the economy has not yet deteriorated in a meaningful way.
“The burden of proof now is higher because of the inflation situation that we’re in,” said Seth Carpenter, a former Fed economist who is now at Morgan Stanley. “They have to get enough information that convinces them that the negative effects of slowing — and possibly negative — growth outweighs the cost to them of inflation.”
Mr. Carpenter said he expected no cuts from the Fed this year but multiple next year, bringing interest rates down to between 2.5 percent to 2.75 percent. Economists at LHMeyer, a research firm, have also shelved cuts this year, assuming there is no “full-blown” recession.
Perhaps the most important determinant of when the central bank will restart rate cuts is what happens with inflation expectations. Beyond a year ahead, expectations have stayed somewhat stable, aside from some survey-based measures that are seen as less reliable than others.
If those expectations begin to wobble in a more notable way, the Fed would become even more hesitant to cut and would need to see even more economic weakness than usual, said William English, a Yale professor and a former director of the Fed’s division of monetary affairs.
Eric Winograd, an economist at the investment firm AllianceBernstein, said Mr. Powell’s inflation-focused posture on Friday would help to avoid that outcome. “The name of the game is: You talk tough,” he said. “You keep inflation expectations where they are, and, by doing that, you preserve your ability to ease later if it’s necessary.”
A higher bar for interest rate cuts could put the Fed in a tougher spot with the Trump administration, Mr. English said. Up until last week, the president had been more subdued in his criticism of the central bank, compared with his first term. He had called for lower interest rates but sought to justify them by pointing to his plans to lower energy prices, among other reasons.
But as the rout in financial markets intensified last week, Mr. Trump turned his ire back toward Mr. Powell and the Fed, in what could be a prelude of more intense pressure to come. At one point, the president appeared to suggest that the market rout was part of his strategy. He circulated a video from a user on Mr. Trump’s social media network that suggested the president was “purposely CRASHING” the markets in part to force the Fed to lower interest rates.
Pressed on the matter on Sunday, Mr. Hassett of the National Economic Council responded by saying that the Fed was independent, before adding: “He’s not trying to tank the market.”
Mr. Trump has already sought to chip away at the central bank’s longstanding independence from the White House by targeting the Fed’s oversight of Wall Street. His decision last month to fire two Democratic commissioners from the Federal Trade Commission has also reverberated widely, raising important questions about what kind of authority the president has over independent agencies and the personnel who run them.
At the event on Friday, Mr. Powell said he fully intended to serve out all of his term, which ends in May 2026. He has also previously been explicit that early removal by the president is “not permitted under the law.”
“The risk to the Fed’s independence is bigger now,” Mr. English, the Yale professor, said. “It just puts them right in the firing line.”
Michael Feroli, chief U.S. economist at J.P. Morgan, is calling for a recession in the second half of this year, with growth declining 1 percent in the third quarter and another 0.5 percent in the fourth quarter. Over the course of the year, he expects growth to fall 0.3 percent and the unemployment rate to rise to 5.3 percent. Even as the Fed’s preferred inflation gauge — once volatile food and energy prices are stripped out — surges to 4.4 percent, Mr. Feroli forecasts that the Fed will restart cuts in June and then lower borrowing costs at every meeting through January until the policy rate reaches 3 percent.
Jonathan Pingle, chief U.S. economist at UBS, has penciled in a percentage point worth of cuts this year even as core inflation reaches 4.6 percent. He expects the unemployment rate to shoot higher this year before peaking at 5.3 percent in 2026. Economists at Goldman Sachs projected that the Fed would deliver three consecutive quarter-point cuts beginning in July.
But there are credible risks to this outlook. The prevailing one is that the inflation shock will be just too enormous for the Fed to look past it by the summer, especially if the economy has not yet deteriorated in a meaningful way.
“The burden of proof now is higher because of the inflation situation that we’re in,” said Seth Carpenter, a former Fed economist who is now at Morgan Stanley. “They have to get enough information that convinces them that the negative effects of slowing — and possibly negative — growth outweighs the cost to them of inflation.”
Mr. Carpenter said he expected no cuts from the Fed this year but multiple next year, bringing interest rates down to between 2.5 percent to 2.75 percent. Economists at LHMeyer, a research firm, have also shelved cuts this year, assuming there is no “full-blown” recession.
Perhaps the most important determinant of when the central bank will restart rate cuts is what happens with inflation expectations. Beyond a year ahead, expectations have stayed somewhat stable, aside from some survey-based measures that are seen as less reliable than others.
If those expectations begin to wobble in a more notable way, the Fed would become even more hesitant to cut and would need to see even more economic weakness than usual, said William English, a Yale professor and a former director of the Fed’s division of monetary affairs.
Eric Winograd, an economist at the investment firm AllianceBernstein, said Mr. Powell’s inflation-focused posture on Friday would help to avoid that outcome. “The name of the game is: You talk tough,” he said. “You keep inflation expectations where they are, and, by doing that, you preserve your ability to ease later if it’s necessary.”
A higher bar for interest rate cuts could put the Fed in a tougher spot with the Trump administration, Mr. English said. Up until last week, the president had been more subdued in his criticism of the central bank, compared with his first term. He had called for lower interest rates but sought to justify them by pointing to his plans to lower energy prices, among other reasons.
But as the rout in financial markets intensified last week, Mr. Trump turned his ire back toward Mr. Powell and the Fed, in what could be a prelude of more intense pressure to come. At one point, the president appeared to suggest that the market rout was part of his strategy. He circulated a video from a user on Mr. Trump’s social media network that suggested the president was “purposely CRASHING” the markets in part to force the Fed to lower interest rates.
Pressed on the matter on Sunday, Mr. Hassett of the National Economic Council responded by saying that the Fed was independent, before adding: “He’s not trying to tank the market.”
Mr. Trump has already sought to chip away at the central bank’s longstanding independence from the White House by targeting the Fed’s oversight of Wall Street. His decision last month to fire two Democratic commissioners from the Federal Trade Commission has also reverberated widely, raising important questions about what kind of authority the president has over independent agencies and the personnel who run them.
At the event on Friday, Mr. Powell said he fully intended to serve out all of his term, which ends in May 2026. He has also previously been explicit that early removal by the president is “not permitted under the law.”
“The risk to the Fed’s independence is bigger now,” Mr. English, the Yale professor, said. “It just puts them right in the firing line.”
When Zeekr, an electric carmaker, opened its factory in Ningbo, China, four years ago, the facility had 500 robots. Now it has 820, with more on the way.Credit...Qilai Shen for The New York Times
For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.
Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.
China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
“The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.
President Trump’s steep tariffs announced on Wednesday, which have caused stocks in Asia and elsewhere to plunge, were the most drastic response yet to China’s export push. From Brazil and Indonesia to Thailand and the European Union, many countries have already moved more quietly to increase tariffs as well.
For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.
Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.
China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
“The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.
President Trump’s steep tariffs announced on Wednesday, which have caused stocks in Asia and elsewhere to plunge, were the most drastic response yet to China’s export push. From Brazil and Indonesia to Thailand and the European Union, many countries have already moved more quietly to increase tariffs as well.
Factories in cities all over China, including Zeekr’s facility in Ningbo, are being upgraded with robots and automation.Credit...Qilai Shen for The New York Times
Chinese leaders are furious at the recent proliferation of trade barriers, and particularly Mr. Trump’s latest tariffs. They take pride in China’s high savings rate, long work hours and abundance of engineers and software programmers, as well as its legions of electricians, welders, mechanics, construction workers and other skilled tradesmen.
On state television Saturday night, an anchor solemnly read a government statement condemning the United States: “It is using tariffs to subvert the existing international economic and trade order” so as “to serve the hegemonic interests of the United States.”
Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry.
China is using more factory robots than the rest of the world combined, and most of them are made in China by Chinese companies, although some components are still imported. After several years of rapid growth, overall installations of new factory equipment have already jumped another 18 percent this year.
When Zeekr, a Chinese electric carmaker, opened a factory four years ago in Ningbo, a two-hour drive south of Shanghai, the facility had 500 robots. Now it has 820, and many more are planned.
As new factories come online, China’s exports are rapidly accelerating. They rose 13.3 percent in 2023 and then another 17.3 percent last year.
Lending by state banks is also financing a boom in corporate research and development. Huawei, a conglomerate making items as varied as smartphones and auto parts, has just opened in Shanghai a research center for 35,000 engineers that has 10 times as much space for offices and labs as Google’s headquarters in Mountain View, Calif.
Chinese leaders are furious at the recent proliferation of trade barriers, and particularly Mr. Trump’s latest tariffs. They take pride in China’s high savings rate, long work hours and abundance of engineers and software programmers, as well as its legions of electricians, welders, mechanics, construction workers and other skilled tradesmen.
On state television Saturday night, an anchor solemnly read a government statement condemning the United States: “It is using tariffs to subvert the existing international economic and trade order” so as “to serve the hegemonic interests of the United States.”
Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry.
China is using more factory robots than the rest of the world combined, and most of them are made in China by Chinese companies, although some components are still imported. After several years of rapid growth, overall installations of new factory equipment have already jumped another 18 percent this year.
When Zeekr, a Chinese electric carmaker, opened a factory four years ago in Ningbo, a two-hour drive south of Shanghai, the facility had 500 robots. Now it has 820, and many more are planned.
As new factories come online, China’s exports are rapidly accelerating. They rose 13.3 percent in 2023 and then another 17.3 percent last year.
Lending by state banks is also financing a boom in corporate research and development. Huawei, a conglomerate making items as varied as smartphones and auto parts, has just opened in Shanghai a research center for 35,000 engineers that has 10 times as much space for offices and labs as Google’s headquarters in Mountain View, Calif.
A few of the 104 separately designed buildings at Huawei’s new research center on the western edge of Shanghai, which has labs, offices and even its own trains for an eight-stop circuit.Credit...Keith Bradsher/The New York Times
Leaders around the world are struggling to decide whether to raise trade barriers to protect what is left of their countries’ industrial sectors.
China has been rapidly expanding its share of global manufacturing for decades. The growth came mainly at the expense of the United States and other longtime industrial powers, but also of developing countries. China has increased its share to 32 percent and rising, from 6 percent in 2000.
China’s factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea and Britain.
Even before Mr. Trump won a second term, Biden administration officials warned during their final year in office about industrial overcapacity in China. They raised some tariffs, notably on electric cars.
But during their first three years, Biden administration officials mostly focused on tighter export controls for technologies like high-end semiconductors, citing national security concerns. They left in place tariffs of 7.5 percent to 25 percent that Mr. Trump had imposed on half of China’s exports to the United States in his first term.
It remains uncertain how the president’s much tougher approach this time will play out. Tariffs have occasionally slowed China’s growth in exports, but not stopped it. Other nations are on high alert for the possibility that Chinese exports could be diverted elsewhere, threatening the economies of longstanding U.S. allies like the European Union and South Korea.
Leaders around the world are struggling to decide whether to raise trade barriers to protect what is left of their countries’ industrial sectors.
China has been rapidly expanding its share of global manufacturing for decades. The growth came mainly at the expense of the United States and other longtime industrial powers, but also of developing countries. China has increased its share to 32 percent and rising, from 6 percent in 2000.
China’s factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea and Britain.
Even before Mr. Trump won a second term, Biden administration officials warned during their final year in office about industrial overcapacity in China. They raised some tariffs, notably on electric cars.
But during their first three years, Biden administration officials mostly focused on tighter export controls for technologies like high-end semiconductors, citing national security concerns. They left in place tariffs of 7.5 percent to 25 percent that Mr. Trump had imposed on half of China’s exports to the United States in his first term.
It remains uncertain how the president’s much tougher approach this time will play out. Tariffs have occasionally slowed China’s growth in exports, but not stopped it. Other nations are on high alert for the possibility that Chinese exports could be diverted elsewhere, threatening the economies of longstanding U.S. allies like the European Union and South Korea.
Five years ago, cranes filled China’s skylines as apartment towers rose. Now, many are gone or idle as banks, under Beijing’s orders, shift lending from real estate to industry.Credit...Qilai Shen for The New York Times
China’s automakers were preparing a push into the American car market in 2017, when Mr. Trump first took office. GAC Motor in Guangzhou, China, brought dozens of U.S. car dealers to the city’s auto show that November. The company announced plans to sell gasoline-powered sport utility vehicles and minivans in the United States by the end of 2019.
But GAC and other Chinese automakers canceled their plans after Mr. Trump included cars in his initial 25 percent tariffs several months later.
Chinese companies still sell almost no cars in the United States. That is unlikely to change: With Mr. Trump’s latest moves, Chinese carmakers now face U.S. tariffs as high as 181 percent.
Blocked in the United States, Chinese automakers have continued building factories and have pivoted their export campaigns elsewhere. Their sales have soared in Australia and Southeast Asia, taking market share from Japanese and American brands. In Mexico, Chinese carmakers held just 0.3 percent in 2017; by last year, it was over 20 percent.
Rapid sales gains in the European Union, and evidence of Chinese government subsidies, prompted E.U. officials last October to impose tariffs of up to 45 percent on electric cars from China.
China is not just building car factories. It has built more petrochemical refinery capacity in the past five years, for example, than Europe, Japan and South Korea together have created since World War II. And China is on track to build these refineries even faster this year. Petrochemicals are then turned into plastics, polyester, vinyl and tires.
Robert E. Lighthizer, who was the United States Trade Representative in Mr. Trump’s first term, said that the latest American tariffs “are long overdue medicine — the real root cause is decades of Chinese industrial policy that has created breathtaking overcapacity and global imbalances.”
China is exporting so much partly because its own people are buying so little. A housing market crash since 2021 has wiped out much of the savings of the middle class and ruined many wealthy families.
China’s automakers were preparing a push into the American car market in 2017, when Mr. Trump first took office. GAC Motor in Guangzhou, China, brought dozens of U.S. car dealers to the city’s auto show that November. The company announced plans to sell gasoline-powered sport utility vehicles and minivans in the United States by the end of 2019.
But GAC and other Chinese automakers canceled their plans after Mr. Trump included cars in his initial 25 percent tariffs several months later.
Chinese companies still sell almost no cars in the United States. That is unlikely to change: With Mr. Trump’s latest moves, Chinese carmakers now face U.S. tariffs as high as 181 percent.
Blocked in the United States, Chinese automakers have continued building factories and have pivoted their export campaigns elsewhere. Their sales have soared in Australia and Southeast Asia, taking market share from Japanese and American brands. In Mexico, Chinese carmakers held just 0.3 percent in 2017; by last year, it was over 20 percent.
Rapid sales gains in the European Union, and evidence of Chinese government subsidies, prompted E.U. officials last October to impose tariffs of up to 45 percent on electric cars from China.
China is not just building car factories. It has built more petrochemical refinery capacity in the past five years, for example, than Europe, Japan and South Korea together have created since World War II. And China is on track to build these refineries even faster this year. Petrochemicals are then turned into plastics, polyester, vinyl and tires.
Robert E. Lighthizer, who was the United States Trade Representative in Mr. Trump’s first term, said that the latest American tariffs “are long overdue medicine — the real root cause is decades of Chinese industrial policy that has created breathtaking overcapacity and global imbalances.”
China is exporting so much partly because its own people are buying so little. A housing market crash since 2021 has wiped out much of the savings of the middle class and ruined many wealthy families.
China’s huge investments in the chemicals industry extend beyond petrochemicals to include this factory in Zibo, China, which uses a rare earth metal to make chemicals that control pollution in gasoline-powered cars’ exhaust.Credit...Keith Bradsher/The New York Times
Tax revenues are falling, but military spending is rising rapidly. That has left the government wary of spending on economic stimulus to help consumers. China has offset its housing debacle instead with its export campaign, creating millions of jobs to build, outfit and operate factories.
Some Chinese economists have recently joined Western economists in suggesting that the country needs to strengthen its meager social safety net. At the start of this year, the minimum government pension for seniors was just $17 a month. That barely buys groceries, even in rural China.
The country’s best-known economist, Professor Li Daokui of Tsinghua University, publicly called in January for raising the minimum monthly pension several fold, to $110. The Chinese government could afford it, he argued, and extra spending by seniors would stimulate the entire economy.
Chinese officials rejected his advice. When the budget came out on March 5, it had an increase in monthly pensions — but it was just $3, bringing it to $20 a month.
The same budget included $100 billion for investments, including ports and other infrastructure that help exporters. And there was a new program to upgrade technology used in manufacturing across 20 Chinese cities.
How bad is it? Analysts at Deutsche Bank published a chart-heavy note today with some eye-opening numbers about the recent market turmoil. “It’s no exaggeration to describe last week’s market moves as historic,” they wrote.
Tax revenues are falling, but military spending is rising rapidly. That has left the government wary of spending on economic stimulus to help consumers. China has offset its housing debacle instead with its export campaign, creating millions of jobs to build, outfit and operate factories.
Some Chinese economists have recently joined Western economists in suggesting that the country needs to strengthen its meager social safety net. At the start of this year, the minimum government pension for seniors was just $17 a month. That barely buys groceries, even in rural China.
The country’s best-known economist, Professor Li Daokui of Tsinghua University, publicly called in January for raising the minimum monthly pension several fold, to $110. The Chinese government could afford it, he argued, and extra spending by seniors would stimulate the entire economy.
Chinese officials rejected his advice. When the budget came out on March 5, it had an increase in monthly pensions — but it was just $3, bringing it to $20 a month.
The same budget included $100 billion for investments, including ports and other infrastructure that help exporters. And there was a new program to upgrade technology used in manufacturing across 20 Chinese cities.
How bad is it? Analysts at Deutsche Bank published a chart-heavy note today with some eye-opening numbers about the recent market turmoil. “It’s no exaggeration to describe last week’s market moves as historic,” they wrote.
• The two-day drop of more than 10 percent in the S&P 500 at the end of last week was the fifth-worst since World War II.
• Last week, the S&P 500 had its ninth-worst week since World War II.
• The VIX index, a measure of volatility often called Wall Street’s “fear gauge,” rose to a level rarely matched in recent decades, with the early days of the coronavirus pandemic and banking crisis of 2008-09
Some analysts are already speculating that Trump might seek a way out by delaying some tariffs. It was not “realistic” for the Trump administration to reach “meaningful agreement” with so many trading partners in such a short window of time, Alicia García-Herrero, the chief economist for Asia at Natixis, a French financial institution, wrote in a note to clients on Monday.
Once again, investors are turning to the relative safety of government bonds, pushing their prices higher and yields lower. Germany’s 10 year bond yields are down 0.1 percentage point to 2.47 percent, a big move for bond markets. U.S. 10-year Treasury yields are holding below 4 percent.
No industry is immune to this morning’s selloff in European stocks. Even shares in defense companies are plummeting. They had been performing really well recently after European governments vowed to quickly increase their defense spending. Shares in Germany’s Rheinmetall are down 9 percent, but dropped as much as 27 percent this morning. Those shares were at a record high less than three weeks ago. Shares in Italy’s Leonardo are down 13 percent.
“It is too soon to say what will be the appropriate path for monetary policy,” Jerome H. Powell, the Federal Reserve chair, said Friday.Credit...Haiyun Jiang for The New York Times
The notion that the Federal Reserve will rush in to rescue investors in a crisis has comforted investors for decades. But in the big market downturn induced by President Trump’s tariffs, no Fed rescue is in sight.
Jerome H. Powell, the Federal Reserve chair, made that clear on Friday. The tariffs are much “larger than expected,” he said, and their immense scale makes it especially important for the central bank to understand their economic effects before taking action.
“It is too soon to say what will be the appropriate path for monetary policy,” he said at a conference in Virginia.
For days, the market momentum has been almost entirely downward, bringing a dubious distinction in sight: a bear market, which is a decline of at least 20 percent from a market top. For the S&P 500, a bear market is already within shouting distance, a scant 2.6 percentage points away.
Investors may need to be very patient, and to hope that changes in tariff policy occur rapidly enough in Washington to turn the markets around and, more important, avert a recession.
India’s government has yet to say a word against the 27 percent tariff announced last week. In March, India offered Trump a few sops – reducing tariffs on Harley-Davidsons and Kentucky bourbon – but that didn’t spare it. Indian officials are telling reporters they are trying to speed through a bilateral trade deal, discussed between Trump and Prime Minister Narendra Modi in February.
Stocks in India fell more than 4 percent after nearly ignoring the effects of the tariffs last week when the rest of Asia was crashing. Many Indian businesses were thinking the changes might give them an advantage against Asian competitors like Vietnam and Bangladesh. But the global selloff seems to have scared everyone. The $5 trillion that Wall Street has shed is worth more than all Indian stocks combined.
Stocks are down across the board in Europe. One sector hit particularly hard are banks as fears of a general economic slowdown, with fewer deals, takes hold. Barclays and Standard Chartered shares are down more than 7 percent. HSBC shares are down more 5 percent.
Stock markets in Europe have opened sharply lower. The FTSE 100 in London and the Stoxx Europe 600 are both down about 5 percent.
Japan became the latest nation to say it was willing to meet with President Trump to discuss the tariffs. Prime Minister Shigeru Ishiba said on Monday that he would stress that Japan “is not doing anything unfair.” Japan’s stocks fell by more than 7 percent on Monday.
China seems to be silencing domestic criticism of its countermeasures against U.S. tariffs. The Chinese Academy of Social Sciences announced on Sunday that it had shut down a research center, after a researcher there wrote on his private social media account that China’s retaliatory tariffs were “completely wrong.”
The mayhem in Hong Kong stocks was in part a delayed reaction since the market was closed on Friday for a holiday. It was also the first chance investors had to digest China’s retaliatory move late on Friday. Bruce Pang, an associate professor at Chinese University of Hong Kong’s business school, said investors are still working through the potential fallout of the tariffs. For now, many investors are fleeing the market and heading to seemingly safer investments such as the Japanese yen and the Swiss franc. Both surged against the U.S. dollar.
Credit...Peter Parks/Agence France-Presse — Getty Images
Taiwan’s stock market closed down 9.7 percent despite support measures announced by the government on Sunday. The companies suffering heavy losses included some of the island’s biggest manufacturers, such as Taiwan Semiconductor Manufacturing Company, the world’s largest chip maker, and Foxconn, an Apple contractor. Taiwan’s president said on Sunday that the island’s government had no plans to impose retaliatory tariffs.
Samsung Electronics tried to downplay the impact of the tariffs on Monday, arguing that it will be nimble when deciding how to use its factories around the world. It makes TVs in Mexico, which was excluded from the latest round of levies. But the company was a pioneer in moving production to Vietnam. Samsung’s stock is down nearly 10 percent since Trump announced the 46 percent tariff on Vietnam.
Credit...Reuters
Stocks in Hong Kong, where many of China’s largest companies are listed, are plunging, down more than 12 percent with about an hour of trading to go.
South Korea’s financial regulator said it was preparing a program that would make $68 billion available to inject into markets if necessary. The worry is that the tariffs will hurt the country’s exporters as well as the companies they work with, said Kim Byoung Hwan, chairman of the Financial Services Commission.
The notion that the Federal Reserve will rush in to rescue investors in a crisis has comforted investors for decades. But in the big market downturn induced by President Trump’s tariffs, no Fed rescue is in sight.
Jerome H. Powell, the Federal Reserve chair, made that clear on Friday. The tariffs are much “larger than expected,” he said, and their immense scale makes it especially important for the central bank to understand their economic effects before taking action.
“It is too soon to say what will be the appropriate path for monetary policy,” he said at a conference in Virginia.
For days, the market momentum has been almost entirely downward, bringing a dubious distinction in sight: a bear market, which is a decline of at least 20 percent from a market top. For the S&P 500, a bear market is already within shouting distance, a scant 2.6 percentage points away.
Investors may need to be very patient, and to hope that changes in tariff policy occur rapidly enough in Washington to turn the markets around and, more important, avert a recession.
India’s government has yet to say a word against the 27 percent tariff announced last week. In March, India offered Trump a few sops – reducing tariffs on Harley-Davidsons and Kentucky bourbon – but that didn’t spare it. Indian officials are telling reporters they are trying to speed through a bilateral trade deal, discussed between Trump and Prime Minister Narendra Modi in February.
Stocks in India fell more than 4 percent after nearly ignoring the effects of the tariffs last week when the rest of Asia was crashing. Many Indian businesses were thinking the changes might give them an advantage against Asian competitors like Vietnam and Bangladesh. But the global selloff seems to have scared everyone. The $5 trillion that Wall Street has shed is worth more than all Indian stocks combined.
Stocks are down across the board in Europe. One sector hit particularly hard are banks as fears of a general economic slowdown, with fewer deals, takes hold. Barclays and Standard Chartered shares are down more than 7 percent. HSBC shares are down more 5 percent.
Stock markets in Europe have opened sharply lower. The FTSE 100 in London and the Stoxx Europe 600 are both down about 5 percent.
Japan became the latest nation to say it was willing to meet with President Trump to discuss the tariffs. Prime Minister Shigeru Ishiba said on Monday that he would stress that Japan “is not doing anything unfair.” Japan’s stocks fell by more than 7 percent on Monday.
China seems to be silencing domestic criticism of its countermeasures against U.S. tariffs. The Chinese Academy of Social Sciences announced on Sunday that it had shut down a research center, after a researcher there wrote on his private social media account that China’s retaliatory tariffs were “completely wrong.”
The mayhem in Hong Kong stocks was in part a delayed reaction since the market was closed on Friday for a holiday. It was also the first chance investors had to digest China’s retaliatory move late on Friday. Bruce Pang, an associate professor at Chinese University of Hong Kong’s business school, said investors are still working through the potential fallout of the tariffs. For now, many investors are fleeing the market and heading to seemingly safer investments such as the Japanese yen and the Swiss franc. Both surged against the U.S. dollar.
Credit...Peter Parks/Agence France-Presse — Getty ImagesTaiwan’s stock market closed down 9.7 percent despite support measures announced by the government on Sunday. The companies suffering heavy losses included some of the island’s biggest manufacturers, such as Taiwan Semiconductor Manufacturing Company, the world’s largest chip maker, and Foxconn, an Apple contractor. Taiwan’s president said on Sunday that the island’s government had no plans to impose retaliatory tariffs.
Samsung Electronics tried to downplay the impact of the tariffs on Monday, arguing that it will be nimble when deciding how to use its factories around the world. It makes TVs in Mexico, which was excluded from the latest round of levies. But the company was a pioneer in moving production to Vietnam. Samsung’s stock is down nearly 10 percent since Trump announced the 46 percent tariff on Vietnam.
Credit...ReutersStocks in Hong Kong, where many of China’s largest companies are listed, are plunging, down more than 12 percent with about an hour of trading to go.
South Korea’s financial regulator said it was preparing a program that would make $68 billion available to inject into markets if necessary. The worry is that the tariffs will hurt the country’s exporters as well as the companies they work with, said Kim Byoung Hwan, chairman of the Financial Services Commission.
President Trump doubled down on the steep tariffs he has imposed on other countries, comparing them to “medicine,” while speaking to reporters on Air Force One on Sunday evening. He said a deal with any country, particularly China, is only viable if the U.S. trade deficit with that nation disappears.
I don’t want anything to go down, but sometimes you have to take medicine to fix something. I spoke to a lot of leaders — European, Asian — from all over the world. They’re dying to make a deal. But I said, “We’re not going to have deficits with your country.” We have a trillion-dollar trade deficit with China. Hundreds of billions of dollars a year we lose with China. And unless we solve that problem, I’m not going to make a deal.
Shoppers in Beijing on Friday. The trade war will be painful, but it is nothing that the country cannot handle, China says.Credit...Kevin Frayer/Getty Images
China’s leaders have sent a clear message about the effects of the Trump administration’s sweeping tariffs: Things will be painful, but it is nothing that the country cannot handle.
A commentary on Sunday in the Communist Party mouthpiece, the People’s Daily, said Beijing had prepared for a trade war with the United States and that China could potentially come out stronger as a result.
“The abuse of tariffs by the United States will have an impact on China, but ‘the sky will not fall,’” it said. “China is a super economy. We are strong and resilient in the face of the U.S. tariff bullying.”
The commentary highlighted how China hopes to position itself as the tariffs cause growing economic disruption. It wants to be seen as a responsible champion of fair trade that is too powerful to succumb to U.S. pressure.
China also sought to project solidarity with other nations targeted by U.S. tariffs in another state media commentary on Sunday.
In that piece, China accused the United States of trying to “subvert the existing international economic and trade order” by putting “U.S. interests above the common good of the international community.” Washington was also advancing “U.S. hegemonic ambitions at the cost of the legitimate interests of all countries,” it said.
China’s projection of relative strength belies the grave harm the Trump administration’s tariffs could potentially inflict on the country.
Mr. Trump is bidding to transform a global trading system that China currently dominates. And exports remain the strongest engine for growth at a time when China is trying to dig itself out of a property crisis and tackle other major economic problems.
Despite that, the People’s Daily commentary argued that China was prepared to weather Mr. Trump’s tariffs because it was no longer as reliant on the U.S. market for its exports. It also said China’s banks were well capitalized and had room to inject more money into the domestic economy. And it argued that it can hit back at the United States with an array of new regulatory tools.
Some of those tools were used on Friday when China responded to Mr. Trump’s tariffs by putting 11 American companies on an unreliable entities list, and another 16 on an export control list. It also announced export controls on medium and heavy rare earths. That was in addition to slapping U.S. goods with tariffs of 34 percent to match duties imposed on Chinese goods.
China has been trying for months to to engage in high-level talks with the Trump administration in preparation for a potential summit between Mr. Trump and China’s top leader, Xi Jinping. But Beijing has struggled to receive much of a response from the White House despite Mr. Trump saying earlier this year that he was open to engaging with Mr. Xi.
China’s responses to two other rounds of 10 percent tariffs imposed by the United States earlier this year were calibrated to leave the door open for negotiations. Some analysts said Friday’s countermeasures were also designed that way.
The People’s Daily commentary said China “did not close the door for negotiations,” but that it would also prepare for the worst. It said the looming crisis would compel China to continue reforming its economy to rely more on its vast domestic market.
“We must turn pressure into motivation,” it said.
For all its bravado about withstanding the American tariffs, China was also censoring criticisms of its own move to impose retaliatory tariffs.
On Friday, a researcher at the Chinese Academy of Social Sciences wrote on social media that China’s countermeasures were “completely wrong.”
“The United States is shooting itself in the foot by tariffs, so we should not shoot ourselves in the foot as well,” wrote the researcher, He Bin, who was deputy director of the academy’s Center for Public Policy Research. “The correct countermeasure is to implement unilateral zero tariffs on imports from all countries.”
Mr. He posted the comment on his personal WeChat Moments, which are visible only to his friends and somewhat akin to a private Facebook page. But a screenshot of the post quickly began circulating more widely.
Then, on Sunday, the Chinese Academy of Social Sciences announced that it was shutting down the center where Mr. He worked. It did not give a reason for the closure but cited internal regulations around the management of research centers. Those regulations state that centers, among other things, “must adhere to the correct political direction.”
Screenshots of Mr. He’s comment were also grayed out on Weibo, another social media platform.
The center may already have been under intense scrutiny: Its director, Zhu Hengpeng, was detained and removed from his posts last year after allegedly making comments critical of Mr. Xi in a private group chat, The Wall Street Journal reported in September.
On Chinese social media, nationalist commentators cheered the center’s closure and linked it to Mr. He’s comments. “Resolutely support the spirit of the central government’s directive!” wrote a military blogger with 4 million followers on Weibo.
China’s leaders have sent a clear message about the effects of the Trump administration’s sweeping tariffs: Things will be painful, but it is nothing that the country cannot handle.
A commentary on Sunday in the Communist Party mouthpiece, the People’s Daily, said Beijing had prepared for a trade war with the United States and that China could potentially come out stronger as a result.
“The abuse of tariffs by the United States will have an impact on China, but ‘the sky will not fall,’” it said. “China is a super economy. We are strong and resilient in the face of the U.S. tariff bullying.”
The commentary highlighted how China hopes to position itself as the tariffs cause growing economic disruption. It wants to be seen as a responsible champion of fair trade that is too powerful to succumb to U.S. pressure.
China also sought to project solidarity with other nations targeted by U.S. tariffs in another state media commentary on Sunday.
In that piece, China accused the United States of trying to “subvert the existing international economic and trade order” by putting “U.S. interests above the common good of the international community.” Washington was also advancing “U.S. hegemonic ambitions at the cost of the legitimate interests of all countries,” it said.
China’s projection of relative strength belies the grave harm the Trump administration’s tariffs could potentially inflict on the country.
Mr. Trump is bidding to transform a global trading system that China currently dominates. And exports remain the strongest engine for growth at a time when China is trying to dig itself out of a property crisis and tackle other major economic problems.
Despite that, the People’s Daily commentary argued that China was prepared to weather Mr. Trump’s tariffs because it was no longer as reliant on the U.S. market for its exports. It also said China’s banks were well capitalized and had room to inject more money into the domestic economy. And it argued that it can hit back at the United States with an array of new regulatory tools.
Some of those tools were used on Friday when China responded to Mr. Trump’s tariffs by putting 11 American companies on an unreliable entities list, and another 16 on an export control list. It also announced export controls on medium and heavy rare earths. That was in addition to slapping U.S. goods with tariffs of 34 percent to match duties imposed on Chinese goods.
China has been trying for months to to engage in high-level talks with the Trump administration in preparation for a potential summit between Mr. Trump and China’s top leader, Xi Jinping. But Beijing has struggled to receive much of a response from the White House despite Mr. Trump saying earlier this year that he was open to engaging with Mr. Xi.
China’s responses to two other rounds of 10 percent tariffs imposed by the United States earlier this year were calibrated to leave the door open for negotiations. Some analysts said Friday’s countermeasures were also designed that way.
The People’s Daily commentary said China “did not close the door for negotiations,” but that it would also prepare for the worst. It said the looming crisis would compel China to continue reforming its economy to rely more on its vast domestic market.
“We must turn pressure into motivation,” it said.
For all its bravado about withstanding the American tariffs, China was also censoring criticisms of its own move to impose retaliatory tariffs.
On Friday, a researcher at the Chinese Academy of Social Sciences wrote on social media that China’s countermeasures were “completely wrong.”
“The United States is shooting itself in the foot by tariffs, so we should not shoot ourselves in the foot as well,” wrote the researcher, He Bin, who was deputy director of the academy’s Center for Public Policy Research. “The correct countermeasure is to implement unilateral zero tariffs on imports from all countries.”
Mr. He posted the comment on his personal WeChat Moments, which are visible only to his friends and somewhat akin to a private Facebook page. But a screenshot of the post quickly began circulating more widely.
Then, on Sunday, the Chinese Academy of Social Sciences announced that it was shutting down the center where Mr. He worked. It did not give a reason for the closure but cited internal regulations around the management of research centers. Those regulations state that centers, among other things, “must adhere to the correct political direction.”
Screenshots of Mr. He’s comment were also grayed out on Weibo, another social media platform.
The center may already have been under intense scrutiny: Its director, Zhu Hengpeng, was detained and removed from his posts last year after allegedly making comments critical of Mr. Xi in a private group chat, The Wall Street Journal reported in September.
On Chinese social media, nationalist commentators cheered the center’s closure and linked it to Mr. He’s comments. “Resolutely support the spirit of the central government’s directive!” wrote a military blogger with 4 million followers on Weibo.
An oil field pump jack in Seminole, Texas, in February.Credit...Julio Cortez/Associated Press
U.S. oil prices fell sharply, briefly dipping below $60 a barrel on Sunday — their lowest level in almost four years — as the economic fallout from President Trump’s latest round of tariffs reverberated around the world.
Crude oil now costs around 15 percent less than it did last Wednesday, just before Mr. Trump revealed his plans to impose stiff new tariffs on imports from most countries. That prices have fallen so far so quickly reflects deepening concern that high tariffs could slow economic growth and perhaps even cause recessions in the United States and the countries it trades with.
Cheaper oil is generally good for consumers and businesses that use gasoline, diesel and jet fuel. In fact, Mr. Trump and his aides have pushed for lower energy prices to curb inflation.
But if prices remain around these levels or fall further, U.S. oil and gas companies are likely to slow drilling, cut spending and lay off workers. That would be especially painful to oil-rich states like Texas and New Mexico.
Another big reason that oil prices have weakened is that the OPEC cartel and its allies announced last week that they would accelerate plans to increase production. That will increase supply of oil at a time when many analysts expect demand to weaken.
U.S. energy companies are also getting squeezed by higher costs for essential materials like steel tubing, which is subject to a 25 percent tariff Mr. Trump announced in February.
Smaller oil companies — a key constituency for Mr. Trump — are likely to be among the first to slow down, as they tend to be more nimble and have fewer financial resources. Natural gas prices have been more resilient, providing some cushion for producers.
Last week, the share price of an exchange-traded fund composed of U.S. oil and gas stocks fell by 20 percent in the two days after Mr. Trump’s tariff announcement.
U.S. oil prices fell sharply, briefly dipping below $60 a barrel on Sunday — their lowest level in almost four years — as the economic fallout from President Trump’s latest round of tariffs reverberated around the world.
Crude oil now costs around 15 percent less than it did last Wednesday, just before Mr. Trump revealed his plans to impose stiff new tariffs on imports from most countries. That prices have fallen so far so quickly reflects deepening concern that high tariffs could slow economic growth and perhaps even cause recessions in the United States and the countries it trades with.
Cheaper oil is generally good for consumers and businesses that use gasoline, diesel and jet fuel. In fact, Mr. Trump and his aides have pushed for lower energy prices to curb inflation.
But if prices remain around these levels or fall further, U.S. oil and gas companies are likely to slow drilling, cut spending and lay off workers. That would be especially painful to oil-rich states like Texas and New Mexico.
Another big reason that oil prices have weakened is that the OPEC cartel and its allies announced last week that they would accelerate plans to increase production. That will increase supply of oil at a time when many analysts expect demand to weaken.
U.S. energy companies are also getting squeezed by higher costs for essential materials like steel tubing, which is subject to a 25 percent tariff Mr. Trump announced in February.
Smaller oil companies — a key constituency for Mr. Trump — are likely to be among the first to slow down, as they tend to be more nimble and have fewer financial resources. Natural gas prices have been more resilient, providing some cushion for producers.
Last week, the share price of an exchange-traded fund composed of U.S. oil and gas stocks fell by 20 percent in the two days after Mr. Trump’s tariff announcement.
Bitcoin at a cryptocurrency exchange.Credit...Dale De La Rey/Agence France-Presse — Getty Images
Virtually everyone in the cryptocurrency world celebrated the second election of President Trump, an enthusiastic booster of the industry who promised to turn the United States into the “crypto capital of the planet.”
But now the man nicknamed “the first Bitcoin president” is presiding over a Bitcoin crash.
Since Mr. Trump announced his global tariffs last week, the price of Bitcoin has plunged 10 percent, dropping below $78,000 on Sunday night. In January, Bitcoin reached a record price of nearly $110,000 on the day that Mr. Trump was inaugurated.
The rapid drop shows that Bitcoin, often pitched as a stable long-term source of value, is still subject to the gyrations of the broader market that has cratered since Mr. Trump announced broad import taxes last week. Many investors treat Bitcoin just like any other tech stock, a risky investment that it makes sense to sell in difficult times.
Ever since he won a second term, Mr. Trump has largely made good on his promises to help the crypto industry. He has appointed regulators who support crypto and signed an executive order directing the creation of a government stockpile of Bitcoin.
At the same time, Mr. Trump has also broadened his personal investments in the crypto world, marketing a so-called memecoin to his supporters.
But the impact of his tariffs on the crypto market has led to some disgruntlement.
“Crypto is weird, but it’s mostly correlated to optimism & risk appetite,” Haseeb Quresehi, a venture investor who specializes in crypto, wrote on social media on Sunday. “That optimism is crumbling under Trump’s silence.”
Virtually everyone in the cryptocurrency world celebrated the second election of President Trump, an enthusiastic booster of the industry who promised to turn the United States into the “crypto capital of the planet.”
But now the man nicknamed “the first Bitcoin president” is presiding over a Bitcoin crash.
Since Mr. Trump announced his global tariffs last week, the price of Bitcoin has plunged 10 percent, dropping below $78,000 on Sunday night. In January, Bitcoin reached a record price of nearly $110,000 on the day that Mr. Trump was inaugurated.
The rapid drop shows that Bitcoin, often pitched as a stable long-term source of value, is still subject to the gyrations of the broader market that has cratered since Mr. Trump announced broad import taxes last week. Many investors treat Bitcoin just like any other tech stock, a risky investment that it makes sense to sell in difficult times.
Ever since he won a second term, Mr. Trump has largely made good on his promises to help the crypto industry. He has appointed regulators who support crypto and signed an executive order directing the creation of a government stockpile of Bitcoin.
At the same time, Mr. Trump has also broadened his personal investments in the crypto world, marketing a so-called memecoin to his supporters.
But the impact of his tariffs on the crypto market has led to some disgruntlement.
“Crypto is weird, but it’s mostly correlated to optimism & risk appetite,” Haseeb Quresehi, a venture investor who specializes in crypto, wrote on social media on Sunday. “That optimism is crumbling under Trump’s silence.”
No comments:
Post a Comment