Trump’s customs definition chaos feeds market collapses and raises stagnation economy

American stock markets fell sharply on Monday amid increasing concerns that the customs definition policies followed by US President Donald Trump may push the world’s largest economy towards stagnation.

After years of strong growth, the state of American economic superiority began to be asked.

Heavy losses in the markets

Anxiety about an economic slowdown in widespread sales in the stock market, erasing $ 1.7 trillion from the S & B 500 index, which is the most important indicator of global markets. The index fell by 2.7%, to a 9% decrease from its highest level on February 19.

The Nasdaq 100 index, which is dominated by the technology sector, has also witnessed its worst day since 2022, as it has lost more than one trillion dollars of its value, with the decline of the shares of the “seven great”, namely: Alphabet (Google), Amazon, Apple, Microsoft, Meta, Invidia, and Tesla.

What led to this sharp decline?

This collapse comes in the markets amid a state of anxiety due to the conflicting statements of Trump on customs tariffs, which led to investors losing confidence in the stability of American trade policies.

Last week, Trump announced the imposition of a 25% customs tariff on imports from Mexico and Canada, and the fees on Chinese goods doubled to 20%. But he quickly fell partially, declaring after two days some of the increases of Mexican and Canadian drawings were postponed until April 2.

Trump also threatened to impose a global system of mutual definitions, so that each country is subject to the same fees that it imposes on American products, starting from April 2. It is scheduled to enter 25% fees on steel and aluminum imports on Wednesday.

Inflation and pressure on consumers

Analysts believe that these measures may lead to an increase in inflation, as additional costs will move to American consumers, which may limit economic growth and raise unemployment rates.

Meanwhile, the continuous cuts of public spending and geopolitical tensions exacerbated the state of economic instability. In an interview with CNBC, Holgher Schmiding, the chief economist at Burnberg Bank, described Trump as a “chaos and confusion”.

As for Peter Tukman, one of the traders of the stock exchange, he said in a video clip posted on the X platform: “What comes from the Oval Office is just unusive decisions and conflicting messages, which lost investors confidence.”

Trump defends his policies

In an interview with Fox News on Sunday, Trump said that the potential economic risks deserve the trouble for “a major economic transformation.”

He added: “We are returning wealth to America, and this is important … It may take some time, but I think it will be great for us.”

When asked about the impact of definitions on inflation, he said: “This may happen, but in return, interest rates decreased.”

White House reactions

Despite the panic that swept the Wall Street, the White House tried to maintain an optimistic situation, pointing to huge investment pledges by the leaders of the major companies.

White House spokesman, Kush Desai, said on Monday that the CEOs responded to the “America First” agenda by providing billions of dollars in investment pledges, stressing that these investments “will create thousands of new jobs.”

For his part, Kevin Haysit, the head of the National Economic Council, reduced the importance of the fluctuation of markets, describing it as merely “simple fluctuations in data.”

As for Howard Lootnick, Minister of Commerce, he said in an interview with NBC: “There will be no recession in America … During the next two years, we will witness the strongest economic growth period.”

Global influence

The wave of decline in the American markets extended to the global markets, where Asian stocks fell sharply on Tuesday, affected by the declines in Wall Street.

In Japan, the Nikai index fell by 3%, reaching its lowest level since September. The Hang Singh Index in Hong Kong also decreased by 0.8%, while Chinese stocks decreased by 0.5%. In Australia, the main index fell 0.8%.

Resorting to safe havens

As economic fears escalated, investors went to the assets of safe haven, as the Japanese yen rose to 147.07 against the dollar, its highest level in five months, and strengthened the Swiss franc.

Gold continued its rise, to reach $ 2895.75 an ounce, approaching its highest level ever. Gold increased by 10% in 2025, after 27% increased last year.

On the other hand, oil prices decreased for the second day in a row, as Brent crude futures fell 0.65% to $ 68.83 a barrel.

Are we on the threshold of stagnation?

Unlike his first term, as Trump was back away from some of his policies when the markets were subjected to turmoil, this time it seems to be determined to move forward in commercial protection policies.

The City analysts reduced their recommendation to American shares to “neutral” after it was “superior”, noting that the American economy may not continue its superiority over the rest of the world in the coming months.

Goldman Sachs also raised the possibility of recession within the next 12 months from 15% to 20%, while GB Morgan Chase raised the percentage from 30% to 40%, citing “extremist American policies”.

At the same time, the return on US Treasury bonds decreased for two years by 0.05% on Monday, to reach the lowest level in five months, enhancing expectations that the Federal Reserve may have to reduce interest rates.

Currently, the standard interest rate of the Federal Reserve is about 4.3%, which is a high level compared to modern historical standards.

Analysts believe that the markets “absorbed the message” that the Trump administration is determined to implement its plans without hesitation, which may make the recession an inevitable possibility.