While the stock market soared Wednesday with President Donald Trump’s announcement that he would pause reciprocal tariffs for 90 days, things were already turning a bit sour again Thursday.
According to the Wall Street Journal, U.S. stocks dropped 2% at the open Thursday. It noted that Trump’s announcement created a “drastically” improved global economic outlook but that things still seem uncertain. Since taking office, Trump has repeatedly announced and paused tariffs.
Wednesday’s rally was the third-best day in modern history for the market, per CNN, but that outlet said that the reciprocal tariffs have already “inflicted significant damage.” After rising nearly 3,000 points Wednesday, the Dow fell more than 900 points Thursday morning, it said. Additionally, the S&P 500 fell 2.6% and the Nasdaq Composite slid 3.1%.
Treasury Secretary Scott Bessent clarified that a 10% baseline tariff rate would be in place for all countries while China’s tariff rate was increased to 125%. Both Trump and Bessent have said that one goal of the tariffs is to bring jobs to the U.S.
However, the tariffs have so far been challenging for some U.S. businesses, including a backpack company KRLD 1080 reported on. Its owner said he’s in a bind – the backpacks used to be manufactured in Vietnam because it was cost prohibited to make them in the U.S. With the new tariffs, its now cost prohibitive to make them in Vietnam, while the $30 bags also remain too expensive to make stateside.
“Let’s say you’re in business right now. So, over the next 30 days… so do you stockpile a bunch of stuff? Do you continue with the plans, the contingent plans to relocate some manufacturing onshore to the United States or move it to maybe another country that’s not going to get hit with tariffs?” said KRLD business analyst David Johnson, illustrating the air of uncertainty due to the tariffs.
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However, there was one other economic bright spot that began to shine this week. Inflation dropped by 0.1% last month to 2.4% for the past 12 months, based on the latest Consumer Price Index report from the Bureau of Labor Statistics. That figure is getting closer to the Federal Reserve Bank’s 2% target and could signal that the bank is closer to lowering interest rates, which would make it less expensive for Americans to borrow money.
“Wall Street parsed the latest consumer-price index, which showed inflation slowing more than expected,” The Wall Street Journal reported Thursday. At the same time, it reported that China also said it would reduce imports of American movies, “another bid to strike at U.S. services exports in an escalating trade war between the two countries.”
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