US stocks closed sharply lower following President Donald Trump's announcement of high tariffs on Japan, South Korea and other trading nations.
Trump announced new tariffs starting August 1 on Japan and South Korea, followed by additional tariffs on Malaysia, Kazakhstan, South Africa, Laos and Myanmar, which caused further market volatility.
Trump said more tariffs would be implemented by July 9, increasing market uncertainty. In April, he imposed tariffs of 10% to 50% before a 90-day moratorium.
The Dow Jones Industrial Average fell 0.94% to 422.17 points, the S&P 500 fell 0.79% to 49.37 points, while the technology-focused Nasdaq fell 0.91% to 188.59 points.
Trump also signed new legislation that includes tax cuts and increased government spending. The move is expected to increase the national deficit by more than $3 trillion over the next 10 years.
Meanwhile, Tesla shares also plunged after CEO Elon Musk announced the formation of a new political party, the “America Party,” adding to tensions with Trump.
Tesla was the biggest loser in the S&P 500 index, falling 6.8% to its lowest close since June 5. Investors see Musk’s political involvement as a risk to the firm.
In other developments, Trump’s trade policies have raised concerns about inflation and made it harder for the Federal Reserve (Fed) to cut interest rates.
The minutes of the June Fed meeting, which will be released early Thursday morning, are expected to provide more clues about the Fed’s monetary policy.
Traders now expect interest rates to remain unchanged in July with a 95% chance, while a rate cut in September is estimated at around 60%, according to CME FedWatch data.
US stock market volume recorded $16.50 billion compared to an average of $18.18 billion over the full 20 trading days.
