Amid market volatility and international backlash, President Donald Trump has likened his sweeping tariffs to medicine.
This cames as he brushed off the market turmoil caused by the tariffs.
Speaking to reporters aboard Air Force One, Trump stated, “I don’t want anything to go down but, sometimes, you have to take medicine to fix something.”
“We have been treated so badly by other countries because we had stupid leadership that allowed this to happen. They took our businesses, they took our money, they took our jobs.”
Donald Trump
It’s clear that Trump is betting on a long-term payoff, unpleasant in the short term but essential for long-term recovery.
Digging in on his so-called “reciprocal tariffs”, Trump said that he would not back down unless other countries balanced their trade with the US.
The US President said that he had spoken with many foreign leaders over the weekend who were “dying to make a deal.”
“I said, ‘We’re not going to have deficits with your country.’ We’re not going to do that, because, to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
Donald Trump
Trump’s comments came as global stocks continued to plummet amid fears of a global trade war and economic downturn.
Taiwan’s benchmark TAIEX and Hong Kong’s Hang Seng plunged about 10 percent on Monday, while Japan’s Nikkei 225 dived nearly 9 percent.
In Singapore, the Straits Times Index tumbled more than 7 percent.
South Korea’s KOSPI fell more than 5 percent, while Australia’s ASX 200 dropped about 6 percent.
US stocks were set for further steep losses when Wall Street reopens, following a two-day rout last week that wiped out more than $6 trillion in market value.
Trump administration officials also played down the risk of an economic downturn despite the market chaos.
US Secretary of the Treasury, Scott Bessent asserted that there was “no reason” to anticipate a recession.
“What we are looking at is building the long-term economic fundamentals for prosperity, and I think the previous administration had put us on the course toward financial calamity.”
Scott Bessent
Bessent said more than 50 nations had started negotiations with the US since the tariff announcement. “He’s created maximum leverage for himself,” Bessent noted.
However, simultaneously negotiating with multiple governments could pose a logistical challenge for the Trump administration and prolong economic uncertainty.
High Odds Of US Entering Recession
Amid the market turmoil, Analysts have sharply raised the odds of the US entering a recession within the next 12 months.
Bruce Kasman, JPMorgan’s head of economic research, said in a note titled, “There Will Be Blood,” that the size and disruptive impact of US trade policies, if sustained, would be sufficient to tip a still healthy US and global expansion into recession.
Lawrence Summers, who served as Treasury Secretary under former US President Bill Clinton, said the markets were reacting to “what may be the most damaging economic policy” enacted by the US since World War II. “What’s happening in future markets now suggests that there’s real disappointment that the President is doubling down on his errors,” Summers said on X.
Tony Sycamore, a market analyst at IG in Sydney, noted that things have gone from bad to worse.
“The lack of reaction from Trump and from Bessent, in terms of their concern levels appearing to be very, very low in terms of the market dislocation. If there isn’t some sort of walking back of the announcements, then we’re heading for a liquidity event and liquidity will get sucked out of these markets big time across all asset classes.”
Tony Sycamore
Trump’s trade policies might be designed to cure what he sees as years of economic injustice, but whether they’ll ultimately heal or harm remains an open question.
The pain of market turmoil is undeniable, and the effects on American businesses and consumers are palpable. In the end, the real test won’t be whether Trump’s “medicine” works, but whether the patient—the U.S. economy—can survive the treatment.
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