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JPMorgan has forecasted a recession for the US economy in the latter half of 2025, attributing it to the economic pressures from President Trump's tariffs. The firm's chief US economist, Michael Feroli, anticipates a GDP contraction of 1% in the third quarter and 0.5% in the fourth, leading to an overall GDP decline of 0.3% for the year. This downturn is expected to push the unemployment rate up to 5.3% from the current 4.2%. Feroli's analysis suggests a "stagflationary" scenario where inflation rises while economic growth falters, with core PCE inflation projected to reach 4.4% by the end of 2025. This situation could challenge the Federal Reserve, which might respond with interest rate cuts starting in June 2025, aiming to lower the benchmark rate to 3% by January 2026. The forecast comes amidst a backdrop of a significant stock market downturn, with major indices like the Dow Jones, S&P 500, and Nasdaq experiencing substantial losses, reflecting investor concerns over the economic outlook.
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Anson Soderbery, an economist at Purdue University, found himself unexpectedly at the center of controversy when the Trump administration cited his research to justify imposing steep tariffs on America's trade partners. Despite his study arguing against such policies, Soderbery received numerous emails from friends and acquaintances after President Trump announced the tariffs in a Rose Garden speech. The administration's approach to calculating these tariffs was met with skepticism and criticism from the economic community. Instead of matching tariffs directly, the White House used a formula that divided each country's trade surplus with the US by the amount of imports from that country, then halved the result. This method was described as crude and arbitrary by critics, including economists whose work was cited but misapplied. For instance, Harvard's Alberto Cavallo noted that if his research had been correctly applied, the tariffs would have been significantly lower. The administration later provided a more detailed explanation, but many still viewed the approach as amateurish, highlighting a disconnect between the policy's intent and its economic justification.
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President Trump's new tariffs, announced as part of a broader trade policy, are set to significantly impact Amazon's profitability. Analyst Eric Sheridan from Goldman Sachs estimates that Amazon could see an annualized operating profit reduction of $5 billion to $10 billion due to increased costs from these tariffs. The tariffs, which include a baseline rate of 10% starting April 5 and higher rates for certain countries like China, are expected to raise Amazon's US merchandise costs by 15% to 20% if no countermeasures are implemented. Following the tariff announcement, Amazon's stock experienced a nearly 7% drop, positioning it in the middle of the pack among the "Magnificent Seven" tech companies, with Tesla leading the declines. Despite these challenges, Goldman Sachs remains optimistic about Amazon's ability to mitigate the impact through vendor negotiations, price adjustments, and shifting product mixes. The firm holds a Buy rating on Amazon with a price target suggesting significant potential upside.
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President Trump's recent tariff announcements have triggered a significant market downturn, with the Dow Jones Industrial Average dropping over 2,000 points and entering correction territory. The escalation of trade tensions, particularly with China's announcement of retaliatory tariffs, has raised concerns about a potential global trade war. Trump's administration is set to impose a baseline 10% tariff on all countries starting Saturday, with higher rates for specific countries from April 9. Despite the market turmoil, Trump remains steadfast, suggesting that the tariffs provide leverage for negotiations and hinting at potential deals if countries offer favorable terms. The market reaction has not only affected stock prices but also led to delays in IPOs and mergers and acquisitions, with companies like Nintendo and StubHub pausing their plans due to the uncertainty. The broader economic implications include higher costs for consumers, potential unemployment, and a slowdown in economic growth, as warned by experts and reflected in the market's response.
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The article discusses the significant downturn in major tech stocks like Nvidia, Apple, and Tesla, which led the decline of the "Magnificent Seven" stocks on Wall Street. This decline was triggered by an escalating trade war, particularly after China announced retaliatory tariffs against the US in response to President Trump's import levies. The tech-heavy Nasdaq Composite entered bear market territory, with Nvidia falling over 7%, Tesla dropping more than 10%, and Apple losing 7% after a massive market cap reduction in the previous session. The market's reaction was exacerbated by concerns over high valuations and spending on AI, highlighted by the release of a Chinese AI chatbot. Despite a brief recovery spurred by news of potential tariff reductions from Vietnam, the market closed near session lows, reflecting ongoing concerns about the economic impact of the trade war. Analysts and financial experts have expressed fears of an economic downturn if the current tariff situation persists.
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The escalation of the trade war between the US and China led to a significant downturn in the stock market, particularly affecting tech giants. Nvidia and Tesla stocks saw sharp declines, with Nvidia dropping nearly 7% and Tesla over 9% by midday. This was part of a broader sell-off in tech stocks, which dragged the Nasdaq Composite down by as much as 5%. The sell-off was triggered by China's retaliatory tariffs against the US, following President Trump's announcement of sweeping tariffs on trading partners. Apple and Meta also experienced significant losses, with Apple's market cap plummeting by over $310 billion in the previous session. Analyst Dan Ives from Wedbush warned that these tariffs could lead to an economic "Armageddon," potentially crushing the tech industry and increasing consumer electronics prices. Despite a slight recovery after Trump mentioned Vietnam's interest in reducing tariffs, major tech stocks like Nvidia, Apple, and Meta were still poised to end the week with substantial losses.
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In a recent analysis, Wedbush analyst Dan Ives has expressed strong concerns over the potential economic fallout from President Trump's tariff announcements. Ives, previously known for his bullish outlook on tech due to AI advancements, now warns that these tariffs could revert the US tech industry by a decade, significantly slowing down the AI revolution. He highlights the drastic increase in consumer goods prices, particularly noting that an iPhone could cost up to $3,500 if manufactured in the US due to the proposed tariffs on China and Taiwan. Ives also points out the logistical and economic challenges of reshaping US manufacturing, suggesting that the high labor costs in the US make it impractical to reshore semiconductor production. Furthermore, he warns of a potential 15% drop in tech earnings, supply chain chaos, and the looming threat of recession or stagflation if these tariffs are not renegotiated. The immediate reaction from China with retaliatory tariffs adds to the complexity, potentially leading to a trade war with significant implications for both the tech sector and US consumers.
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President Trump took to Truth Social to defend his tariff policies, urging Federal Reserve Chairman Jerome Powell to cut interest rates amidst market volatility. He highlighted recent economic successes, including a robust jobs report for March, which added 228,000 jobs, far surpassing expectations. Trump's aggressive tariff stance was further solidified with the announcement of new tariffs impacting 185 countries, with rates ranging from a 10% baseline to a 54% total tariff on Chinese imports. This move prompted immediate retaliation from China, which imposed a 34% tariff on all US goods, intensifying the trade war. The financial markets reacted sharply, with major indices like the Dow Jones Industrial Average experiencing significant drops. Trump's comments and the ongoing tariff disputes have led to increased economic uncertainty, with investors and analysts closely watching the unfolding situation.
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Federal Reserve Chairman Jerome Powell has shifted his stance on the impact of President Trump's tariffs, suggesting that the resulting inflation might not be as transitory as previously thought. This change in perspective comes amidst Trump's public pressure on Powell to lower interest rates, accusing him of being slow to act. Powell, speaking at an event in Arlington, Virginia, highlighted the uncertainties surrounding the economic effects of the tariffs, which could lead to higher inflation and slower growth. Despite these concerns, Powell and other Fed officials have indicated a reluctance to make hasty decisions on monetary policy, emphasizing a need for more clarity before any adjustments. The market has reacted with significant volatility, with stocks experiencing their worst one-day drop since the onset of the 2020 Covid-19 crisis, and traders now anticipating multiple rate cuts in response to potential recessionary pressures. Meanwhile, a robust labor report did not sway the Fed's cautious approach, with some officials advocating for maintaining a restrictive stance on rates to manage inflation expectations. This situation underscores the complex economic environment the Fed must navigate, balancing inflation control with economic growth amidst political pressures.
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The recent announcement of reciprocal tariffs by President Trump has sent shockwaves through the stock market, with the S&P 500 experiencing its most significant single-day drop since the early days of the 2020 global health crisis. The market's failure to anticipate the extent of these tariffs led to widespread panic as investors grappled with the implications of higher prices, stalled economic growth, and escalating international tensions. Analysts and economists are now revising their forecasts, with some like JPMorgan's Michael Feroli suggesting that these tariffs could be the largest tax increase since 1968, potentially pushing the U.S. economy towards a recession. The Federal Reserve is in a precarious position, needing to balance inflation control with economic growth, while the global trading landscape faces a shake-up as countries consider retaliatory measures. This uncertainty could deter business investments in the U.S., with the possibility of a broader trade war looming on the horizon.
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President Trump's recent tariff announcements have sent shockwaves through global markets, with the US stock market experiencing its most significant sell-off since 2020. Despite Trump's attempts to downplay the impact, the markets continued to decline as fears of a global economic downturn grew. China responded with its own set of retaliatory tariffs, imposing a 34% duty on US goods starting April 10, escalating the ongoing trade war. The Trump administration's strategy includes a baseline 10% tariff on all countries, with higher rates for nations considered to have unfair trade practices. This has led to a broad market reaction, with tech giants like Apple and Nvidia losing over $800 billion in market cap. Automakers are also feeling the pressure, with companies like Volkswagen, Ford, and GM making strategic adjustments, including potential production shifts to the US to mitigate the impact of the tariffs. The situation has raised concerns about stagflation and increased the risk of a US recession, as noted by Wall Street analysts.
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The upcoming March jobs report, set to be released amidst market turmoil following President Trump's tariff announcements, is anticipated to reflect a slight decrease in job growth with nonfarm payrolls expected to rise by 140,000, down from February's 151,000. The unemployment rate is expected to remain unchanged at 4.1%. This report comes at a time when investors are increasingly anxious about the potential economic slowdown due to Trump's tariff policies, which could push the U.S. towards a recession. Despite these concerns, the labor market has shown signs of cooling rather than contracting, with hiring slowing but layoffs remaining low. Recent data also indicates a decrease in job openings and a stable but less dynamic labor market environment. Economists are uncertain if the March report will provide clear insights into the impact of Trump's policies, especially since the bulk of the tariffs were not yet in effect during the reporting period. However, there's speculation that the anticipation of these policies might have already influenced hiring decisions.
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President Donald Trump, during his 2024 campaign, promised significant tariffs on US trading partners, particularly targeting China with duties up to 60%. This week, he made good on those promises by signing an executive order that will increase tariffs on Chinese goods to 54% and impose a 10% tariff floor on most other countries. These actions, taken unilaterally, have caused a sharp decline in the stock market, with investors reacting to what could be the highest US tariffs in over a century. Trump's approach includes new 25% tariffs on foreign-made cars, aiming to protect domestic industries. Despite market reactions, Trump and his administration appear committed to these policies, viewing them as a strategic reordering of global trade dynamics. The use of the International Emergency Economic Powers Act allowed for swift implementation, bypassing traditional legislative processes. This move has sparked debate and concern over its economic implications, with some experts questioning whether the negative impacts will force a policy reversal.
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President Trump's announcement of broad reciprocal tariffs on all countries, dubbed "Liberation Day," has sparked a significant market reaction and global trade concerns. The baseline tariff of 10% across all countries, with higher duties for nations deemed as "bad actors," has led to a sharp decline in US stocks, with the Dow dropping around 1,260 points and the Nasdaq leading the slide. This escalation in the ongoing trade war includes plans for a 25% tariff on foreign-made vehicles, which could cost US consumers over $30 billion in the first year due to higher car prices and reduced sales. The tariffs are expected to have a profound impact on global trade, with countries like China, Vietnam, and Thailand facing steep reciprocal duties. Retaliation from trading partners is anticipated, and the move has been criticized for potentially damaging the world's poorest countries and disrupting established trade relationships. The Trump administration's approach seems to focus on reducing the US trade deficit, but it has raised concerns about inflation, a potential recession, and the overall fairness of global trade practices.
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President Trump's recent announcement of the steepest tariffs in over a century has significantly complicated the Federal Reserve's economic management strategy. The unexpected tariffs have led economists to revise their forecasts, predicting challenges like higher inflation and slower growth, with some even suggesting a potential U.S. recession. Market reactions have been swift, with traders now expecting the Fed to cut interest rates up to four times this year, starting possibly in June, as concerns about a recession overshadow inflation worries. However, analysts are not unanimous; while some like Morgan Stanley predict no rate cuts due to inflation concerns, others like Evercore ISI see a broad spectrum of possibilities from no cuts to over five, depending on economic developments. The Fed's policymakers are currently adopting a wait-and-see approach, with many expressing concerns over inflation and the temporary or permanent nature of price increases due to the tariffs. The uncertainty surrounding the tariffs' duration and their economic impact remains a critical issue, with some experts estimating a 50% chance of a recession if the tariffs persist for just three months.
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President Trump's administration has introduced a new tariff calculation methodology aimed at achieving trade reciprocity, which was detailed in a statement from the Office of the United States Trade Representative. The approach simplifies the calculation by focusing primarily on a country's trade surplus with the US, using data from the US Census Bureau for 2024. The formula involves dividing the trade surplus by total exports, with adjustments for import demand and price elasticity, which are set to cancel each other out. Despite the complexity of achieving true reciprocity, the administration's method aims to drive bilateral trade deficits to zero. Trump announced a 50% discount on these calculated tariffs, labeling it a "kind reciprocal" policy, alongside a 10% baseline tariff for countries not otherwise affected. This policy shift, if implemented, would significantly increase the US's average tariff rate to 29%, marking a historic high and potentially reshaping global trade dynamics. However, this approach has sparked debate and questions regarding its alignment with economic research on trade deficits.
