Trillion-dollar swings: Trump's tariff rumours jolt markets
Donald Trump is considering a 90-day suspension of tariffs for all countries except China, according to a rumour that lasted seven minutes. During this time, the American stock market turned positive, with stock values increasing by $2.5 trillion. Soon after, declines occurred again.
On Monday afternoon Eastern Time, the American stock market suddenly turned positive again, after being dominated by losses for most of the day. The scale of declines in financial markets is also significant across the ocean. The American S&P 500 index lost 2.8 percent, while the Nasdaq fell by 3.7 percent. An equally substantial decline, reaching 3.7 percent, affected the Russell 2000 index, which tracks smaller companies' stock prices.
Suddenly, the situation changed, and instead of "bloody red," green appeared. On the social media platform X, a rumour about the alleged suspension of Donald Trump's tariffs for another 90 days spread at lightning speed. This information was published by Reuters, followed by Yahoo Finance and the Economic Times. CNBC also reported these rumours. Suddenly, "major indices on Wall Street changed course and surged upward," reported Reuters.
This was enough for the stock value to increase by $2.5 trillion for a few minutes compared to earlier declines.
Investors don't want tariffs
Bloomberg notes that the market reacted enthusiastically to the rumour about the suspension of tariffs. If Trump keeps the tariffs as he says, the economy could quickly contract and plunge the S&P 500 into a bear market. However, if he lifts them, the economy could start growing, and stocks could reclaim their records.
Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, quoted by Bloomberg, said there is no doubt that if Trump woke up tomorrow and said, "You know what? I won't do it," the markets would return to a new peak.
However, the market rally was short-lived. The White House rejected the reports from Reuters and CNBC, dismissing them as false. Bloomberg, meanwhile, notes that the Trump administration is delivering mixed signals. While some cabinet members suggest that discussions about reducing tariffs are underway with as many as 50 to 70 countries, White House trade adviser Peter Navarro maintains that there is no room for negotiation.
Donald Trump himself admitted on Monday that there may be permanent tariffs, but there may also be negotiations because there are things we need beyond tariffs. Investors themselves do not know how to interpret these messages.
Alec Young, the chief investment strategist at Mapsignals, believes that if such a policy is introduced and remains in place for several years, it could fundamentally reshape the structure of the American stock market. He also pointed out that the market is anticipating structural shifts linked to the political outlook for the Republicans. According to Young, the Republican party could face significant risks in the 2026 elections if voters become concerned about an economic downturn and are frustrated over losing roughly 20 percent of their investments in just a few days. He suggested that turmoil in the stock market could potentially drive the current ruling party out of office.
