The week did not start well for the stock market. On Monday, the US stock market saw a massive sell-off when former President Donald Trump announced new tariffs on imported goods. Following the news, the Dow Jones Industrial Average fell 533 points, or 1.2%. The S&P 500 fell 1% and the Nasdaq Composite fell 1.1%.
Trump shared screenshots of letters sent to several countries in several posts on Truth Social. These letters call for imposing heavy tariffs on goods imported from at least seven countries, including South Korea, Japan, Malaysia, Kazakhstan, South Africa, Laos and Myanmar, starting August 1.
The major stock indexes hit the lowest levels of the day in afternoon trade. White House press secretary Caroline Levitt said a total of 14 letters would be sent on Monday and more would be released in the coming days. Trump also said he would extend the deadline for tariffs proposed this week to August 1.
Trump’s move also affected auto companies. Shares of Toyota Motor and Honda Motor fell by 4%. Nvidia shares fell marginally while Apple, Alphabet and AMD shares fell more than 2%.
This was the first of several upcoming trade announcements to be made by Trump. US Treasury Secretary Scott Bessant said on CNBC’s ‘Squawk Box’ that several trade announcements would be made in the next 48 hours and the coming days would be very busy.
Further escalating the trade tension, Trump also threatened to impose an additional 10% tariff on countries belonging to the BRICS group. BRICS includes emerging countries like Brazil, Russia, India and China which have been trying to reduce their dependence on the US dollar in recent years. However, Trump did not give any specific information about BRICS’ ‘anti-American policies’.
At this time, the BRICS group meeting is also going on in Rio de Janeiro, Brazil. Jed Ellerbrock, portfolio manager at Argent Capital Management, told CNBC, “The market is at a record high right now and in such a situation, talk of tariffs can spoil the atmosphere. The more there is talk of tariffs, the more unhappy the market will be.” Tesla shares also put pressure on the market.
The company’s CEO Elon Musk announced the formation of a new political party called ‘America Party’ over the weekend. Investors do not like Musk’s increasing interest in politics, which is affecting Tesla’s brand and sales. Due to this, Tesla shares fell by 7%.
Conclusion: Trump’s new tariff announcement has led to a big decline in the stock market. There are signs of a continuous decline in the Dow Jones, S&P 500 and Nasdaq Composite. Investors will keep an eye on more trade announcements in the coming days to predict the direction of the market.
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