Wall Street is in freefall, Bitcoin is tumbling, and the fear gauge is soaring as President Donald Trump’s erratic and reckless economic policies send shockwaves through global markets.
On Monday, U.S. stocks plunged in their worst selloff of the year, with the Dow Jones Industrial Average dropping 890 points, the S&P 500 falling 2.7%, and the Nasdaq Composite plummeting 4%.
The selloff, driven by fears of Trump’s escalating trade wars and inflationary policies, has left investors scrambling for safety and raised alarms about the stability of the U.S. economy.
“You can’t take a battering ram to every major institution in America and expect the economy to do well,” said former Labor Secretary Robert Reich.
Tariffs, Chaos, and Economic Pain
Trump’s trade policies, which include sweeping tariffs on imports from China, Canada, Mexico, and other key trading partners, are at the heart of the turmoil.
Last week, Trump doubled tariffs on Chinese imports to 20%, imposed a 25% tariff on steel and aluminum, and threatened a staggering 250% tariff on Canadian dairy products.
A tariff is a tax imposed on imported goods when they are brought into the country, which directly lead to higher consumer prices.
These measures, part of what Trump calls a “period of transition,” have sparked fears of a global trade war, disrupted supply chains, and sent prices soaring for American consumers.
“The talk of tariffs is, in a lot of ways, worse than the implementation of them,” said David Bahnsen, chief investment officer at the Bahnsen Group. “The tariff talk, reversal, speculation, and chaos only foster uncertainty.”
While details on who’s taxing whom for how much seem to change almost daily, the threat of new tariffs remains.
This uncertainty is wreaking havoc on markets. The VIX, Wall Street’s fear gauge, surged to its highest level this year, reflecting widespread investor anxiety.
Tech stocks, once the darlings of the market, led the selloff, with Tesla plunging 15.4% and Apple, Microsoft, and Nvidia each falling more than 4%. The Nasdaq is now in correction territory, down 8.6% from its February peak.
Inflation and the Working Class Squeeze
The economic pain isn’t limited to Wall Street. Trump’s tariffs and inflationary policies are hitting working-class Americans hardest.
Prices for everyday goods, from food to electronics, are rising as businesses pass on the costs of tariffs to consumers.
A Federal Reserve Bank of New York report released Monday showed that worries about household financial situations have reached their highest level since November 2023.
“The cost of living — the single biggest problem identified by consumers over the last several years — is going up, not down,” said Reich, who is now an economist at the University of California, Berkeley. “Trump’s tariffs on steel and aluminum, and his threatened 25% tariffs on Canada and Mexico, are playing havoc with supply chains inside and outside America.”
The ripple effects are already being felt. Layoffs are mounting, hiring is slowing, and consumer confidence is eroding. Corporations are pulling back on investments in new jobs, equipment, and factories, unable to plan for the future amid Trump’s chaotic policies.
The yield on the 10-year U.S. Treasury slid to 4.225% as investors flocked to safer assets, signaling deep concerns about economic growth.
A fight is brewing between Trump and Federal Reserve Chairman Jerome Powell over the central bank’s unwillingness to aggressively cut interest rates.
A Recession on the Horizon?
Trump’s refusal to rule out a recession has only added to the unease.
In an interview with Fox News on Sunday, the president acknowledged that the U.S. economy is in a “period of transition” but offered no clear plan to address the growing crisis.
“I hate to predict things like that,” Trump said when asked about the possibility of a recession. “There is a period of transition because what we’re doing is very big.”
But “very big” may mean very bad for millions of Americans. Economists across the political spectrum warn that Trump’s tariffs and trade wars could trigger a sharp economic downturn.
“Simulations have been done on the full tariffs against China, Canada and Mexico and, if you believe them, we’ll be in recession in nine to 12 months,” Carl Tannenbaum, chief economist at Northern Trust.
Goldman Sachs and JPMorgan Chase have both downgraded their forecasts for first-quarter growth, citing tariffs and broader policy uncertainty. BNP Paribas anticipates “lasting damage to global economic activity,” even if the tariffs are eventually removed.
“You can’t underplay the potential drag on economic damage. This is a recession for North America,” said Greg Daco, chief economist at accounting firm EY.
Ultimately, Trump’s tariffs reflect the weakness—not the strength—of U.S. capitalism and its inability to spur growth, orchestrate new investment, and increase profits.
A Betrayal of Working Americans
Trump’s economic policies, which disproportionately benefit the wealthiest Americans, stand in stark contrast to the promises he made to working-class voters.
“We stand committed to the proposition that freedom is no half-and-half affair. If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the marketplace,” said President Franklin D. Roosevelt, a sentiment that seems lost on the current administration.
Instead, Trump’s policies are exacerbating inequality and threatening to push millions of Americans into poverty.
The bottom 90% of Americans, including most Trump voters, are already struggling to make ends meet. With inflation rising, jobs disappearing, and wages stagnating, the next 18 months could be devastating for working families.
Trump’s pursuit of economic advantages for the super-rich directly contradicts America’s long held belief that government policies should distribute the nation’s wealthy more fairly.
“Trump does not understand tariffs,” said Lisa McCormick, one of New Jersey’s leading anti-establishment progressive Democrats. “Tariffs don’t help workers, because they just allow corporations to jack up prices to match the cost of imports, resulting in excessive profits.”
What’s Next?
As the market turmoil continues, all eyes are on the White House. Will Trump double down on his destructive trade policies, or will he finally heed the warnings of economists and investors? For now, the president seems determined to stay the course, even as the economic foundation crumbles beneath him.
“There are a lot of reasons to be extremely bullish about the economy going forward,” said White House National Economic Council Director Kevin Hassett, attempting to reassure investors. But his words rang hollow as stocks continued to slide and fears of a recession grew.
One thing is clear: Trump’s reckless economic policies are putting the American economy — and the livelihoods of millions of working-class Americans — at grave risk.