The US stock market continued to drop on Monday as the White House denied that Donald Trump’s trade policies were causing lasting chaos within the economy.
The S&P 500 fell 2.7%, the Dow Jones dropped 2%, and the tech-heavy Nasdaq dropped 4% as investors sold shares in the so-called “magnificent seven” – Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia and Tesla. Tesla’s shares had their worst day since September 2020, falling 15%.
The fall came a day after Trump skirted around questions about a potential recession on Sunday. Asked if he expected a recession, Trump said: “There is a period of transition, because what we’re doing is very big … It takes a little time, but I think it should be great for us.”
Kevin Hassett, the head of the national economic council, told CNBC on Monday that any uncertainty around Trump’s trade policies would be resolved by early April and that the policies were “creating jobs in the US”.
“It’s starting to have the intended effect of onshoring in the US,” Hassett said, citing recent job figures that showed an increase of 10,000 manufacturing jobs in February. For context, the increase represents about a 0.08% increase in manufacturing jobs, of which there are about 12.7m in the US.
Hassett insisted that “there’s a lot of reasons to be extremely bullish going forward”, saying that the Trump administration was still aiming for “the biggest tax cuts in history, massive deregulation and a productivity boom from artificial intelligence”.
“Everyone is talking about uncertainty. Surely there’s uncertainty in exactly how the trade policy will work itself out, but the tax policy is almost sure to work,” Hassett said.
Over the last week, as the US stock market has slumped, Trump and his administration have been busy working the talkshow circuits trying to allay growing concerns of a recession and continue to push for his trade policies.
Since coming into office, Trump has started a trade war with America’s three largest trading partners. Trump has increased tariffs on China, first by 10% and now by 20%. He has pulled back on 25% tariffs against goods from Mexico and Canada, though he is still threatening to impose the tariffs against the two countries next month.
Atlanta Federal Reserve’s closely followed GDP Now tracker – which forecasts US economic growth – is suggesting the economy could contract in the first three months of the year, largely due to an outsized drag from net trade.
Trump has repeatedly balked at the idea that his trade policies have caused uncertainty.
Howard Lutnick, Trump’s commerce secretary, told NBC’s Meet the Press that “there’s going to be no recession in America”, comparing doubts about Trump’s trade policies to previous skepticism over Trump winning the election.
“You are going to see over the next two years the greatest set of growth coming from America,” Lutnick said.
