The stock market suffered a sharp decline at the start of the week after President Trump refused to rule out the possibility of a recession, fueling investor concerns about the state of the U.S. economy.
On Monday, the Dow Jones Industrial Average dropped 890 points, a decline of 2.1%. The Nasdaq composite fell 4%, while the S&P 500 closed down 2.7%. The steep selloff followed weeks of market instability, driven by weak economic data and unpredictable tariff policies from the Trump administration. However, losses accelerated after Trump hesitated to give a clear economic outlook during a Sunday interview.
When asked whether he expected a recession this year, Trump responded, “I hate to predict things like that,” adding that the economy was undergoing a “period of transition” as his administration worked to “bring wealth back to America.” While he remained optimistic about long-term growth, his reluctance to provide a firm reassurance rattled markets, leading to a sharp decline in stock prices.
All three major indexes are now trading below their levels on November 5, 2024—the day of Trump’s reelection, which initially triggered a strong market rally. The Nasdaq at one point was down as much as 4.5% before recovering slightly.
Investors and financial analysts have grown increasingly concerned about the risk of a recession, as economic indicators suggest a slowdown. Recent employment reports, consumer confidence surveys, and inflation data show signs of weakness compared to gains made in the final months of the Biden administration. Business leaders and economists have also expressed unease over Trump’s trade policies, particularly his shifting stance on tariffs affecting key trade partners.
Last week, Trump imposed a 25% tariff on all Mexican and Canadian imports, only to later exempt products that meet U.S.-Mexico-Canada Agreement (USMCA) requirements. He has also threatened additional tariffs on Canadian lumber and dairy, while promoting plans for reciprocal import taxes to match foreign tariffs on U.S. goods. These unpredictable trade moves have disrupted global supply chains and made it more difficult for businesses to plan for the future.
Canada has already responded with retaliatory measures. The Canadian federal government and several provincial leaders have implemented new tariffs on American products, increased fees on Canadian energy exports, and removed certain U.S. goods from store shelves. The province of Ontario has taken additional steps by applying a 25% surcharge on electricity exports to three U.S. states—Michigan, Minnesota, and New York—starting Monday. This policy is expected to impact energy costs for 1.5 million American homes and businesses, with potential losses reaching up to $400,000 per day.
Trump’s escalating trade war has sparked widespread concern, including from within his own party. Many economists warn that rising costs and declining exports could further weaken the economy, pushing the U.S. closer to a recession.
National Economic Council Director Kevin Hassett attempted to ease fears on Monday, arguing that the economy was still on track for growth. He suggested that the first quarter would likely remain in positive territory and that the second quarter would improve as the effects of tax cuts became more apparent. However, his comments did little to calm investors, as uncertainty continues to weigh on financial markets.
Americans and investors alike are increasingly frustrated with Trump’s economic policies and lack of clear direction. The market’s reaction reflects growing skepticism about the administration’s handling of trade and economic stability, as fears of a potential downturn continue to mount.