US economy meltdown as stocks tumble in wake of Donald Trump tariffs
US stocks on Wall Street fell on Friday amid growing concerns among consumers and investors about Donald Trump‘s tariff policy. The S&P 500 dropped 2%, while the tech-focused Nasdaq Composite slid 2.7%.
However, US government debt rallied, pushing the 10-year Treasury yield down 0.11 percentage points to 4.26%. “US data is only inflaming stagflation fears,” James Knightley, an economist at investment bank ING, told the Financial Times.
“Hot inflation and cooling consumer spending are trends that are likely to be intensified by President Trump’s aggressive moves on tariffs and government spending cuts.”
Last week, the US President announced new import taxes of 25% on cars and car parts coming into the US.
Trump said the latest tariffs would come into effect on April 2, with charges on businesses importing vehicles starting over the next days. Taxes on spare parts are set to start in May or later.
He claimed that the tariffs would lead to “tremendous growth” for the industry, and create jobs and investment in the US.
However, analysts at ING – a Dutch multinational banking and financial services company – have argued that tariffs introduced by Trump in his first term had no discernible positive effect on the US economy.
They wrote: “In 2018, Trump imposed tariffs, particularly on China, but loopholes allowed some production to be diverted to third-party nations, such as Vietnam and Korea.
“These actions failed to generate any meaningful improvement in US manufacturing performance, with the output volumes actually down 0.25% from where they were at the beginning of 2018; unemployment levels were unchanged.”
They added that Trump’s new tariffs could potentially hit every single American with an extra $2000 (£1545) in annual costs.
The US imported about eight million cars last year – accounting for about $240bn (£186bn) in trade and roughly half of overall sales.
Mexico is the top supplier of cars to the US, followed by South Korea, Japan, Canada and Germany.
Trump’s tariff announcement provoked a furious response from world leaders and threats of retaliation.
Canada’s Prime Minister Mark Carney promised a tough response and in a statement on Friday his office said Toronto plans to implement retaliatory tariffs on US goods next week.
“The Prime Minister informed the President that his government will implement retaliatory tariffs to protect Canadian workers and our economy, following the announcement of additional US trade actions on April 2, 2025,” the Prime Minister’s Office said in a press release.