Tuesday Briefing: U.S. Recession Fear Rattles Markets

Credit…Charly Triballeau/Agence France-Presse — Getty Images

Economic fears sent world markets into a dive

Stock markets around the world fell yesterday, a day after President Trump refused to rule out the possibility that his trade policies may cause a recession this year. The S&P 500 was down by nearly 3 percent, the sharpest drop in months. Several retaliatory tariffs against the U.S. also went into effect. Here’s what to know:

Stocks tumbled

Many stocks dropped yesterday as nervous investors reacted to a Trump interview that aired on Sunday in which he described “a period of transition” for the U.S. economy, and suggested more tariffs could come. Prices also plunged for several large tech companies, whose stocks have an outsize influence. Markets in Europe and Asia were under pressure, too, but the declines paled in comparison with losses on Wall Street.

Global effects

In a report, analysts at JPMorgan Chase warned that the possibility of a U.S. slowdown had resulted in a “materially higher risk of a global recession this year because of extreme U.S. policies.” They put the probability of a downturn at 40 percent.

Several countries issued their own tariffs

The Canadian province of Ontario imposed a 25 percent tariff on energy exports to Michigan, Minnesota and New York. The move will cost businesses and residents in each state up to $400,000 per day, Ontario’s top official said.

Beijing imposed tariffs on many farm products from the U.S. Japanese officials are expected to visit Washington this week for talks before tariffs hit exports from Japan. Trump is set to issue tomorrow a 25 percent tariff on all steel and aluminum imports, but some metals businesses said that was good news.

More on Trump

• The new U.S. energy secretary promised a “180-degree pivot” on climate policy, to the applause of oil and gas executives.

• Greenland is voting for a new parliament that could shape its future relations with the U.S.

• Trump’s comment about scrapping a major U.S. semiconductor program sent panic through Washington.

• Days after Secretary of State Marco Rubio and Elon Musk fought at the White House, it seems as if they’re seeking to smooth things over.

• The announcement of Musk’s position in the White House sent Tesla stocks soaring. Now those gains have evaporated.

• In his second term, Trump is using more honey than vinegar to maintain his grip on Republicans, but the threat to ruin them is always there.

• Track Trump’s actions since he took office.