US President Donald Trump sparked a global trade market downturn with his suggestion of imposing a 50% levy on European Union goods starting June 1. The statement, posted on Truth Social, targets the European Union for being “very difficult to deal with” over trade.
Wall Street quickly reacted negatively, with S&P 500, Nasdaq-100, and Dow Jones Industrial Average stock futures plummeting over 1%. Treasury yields dropped sharply after investors anticipated slower growth due to increased US deficit concerns.
Market sentiment has shifted as a result. Komal Sri-Kumar, president of Sri-Kumar Global Strategies, stated that the chances of a recession have increased. The EU is now the largest exporter to the US, surpassing China. Trump’s comments follow a recent rally for the S&P 500, which has risen 20.8% over six weeks.
However, stocks received another boost after China and the US agreed to lower taxes on each other’s exports for 90 days while ironing out a broader trade agreement. The CBOE Volatility Index (VIX) is now near 25, indicating traders are seeking protection amid uncertainty.
Source: https://www.cnbc.com/2025/05/23/trump-ruins-investors-long-weekend-by-ramping-up-his-trade-war-again.html