After President Donald Trump escalated the trade war further with China by announcing new tariffs, S&P 500 and NASDAQ suffered to record their worst week of the year. Donald Trump announced that from September 1, an additional 10 per cent tariff will be levied on goods worth over USD 300 billion, including even toys and iPhone. It will be co-existing with the 25 per cent imposed earlier for goods worth USD 250 billion which are imported from China.
Response from the US stock market has been all negative as most of the share markets closed with a loss after the announcement. The Dow succumbed by almost 100 points to end up 0.4 per cent lower. It even slumped by over 300 points on Friday, registering its worst week since May. If that wasn’t enough, S&P 500 and NASDAQ returned with even worse showing as they closed down 0.7 per cent and 1.3 per cent respectively. According to Refinitiv, this was the worst showing from both S&P 500 and NASDAQ for a week this year. A lot hinges on the Federal rate cuts that are expected to be rolled out by September. In the meanwhile, tariffs will play the key role on deciding which way the US economy will swing. Economists believe that the new tariffs announced by Donald Trump will see the country’s GDP losing around 0.2 per cent of its GDP growth. There are concerns that the loss may swell up to 0.6–0.7 per cent if the tariffs actually rise up to 25 per cent. The Dow dwindled by around 600 points to register the greatest single-day point change since January.
Talking of the US economy, the unemployment rate reported by the authorities remained constant at 3.7 per cent despite the Fed generating a total of 164,000 jobs.