Trump causes chaos in markets, contradicts recession and isolates the US

The answer was quick. It was enough Donald Trump to hesitate to the word “recession” for Wall Street to rush downhill. US bags melted on Monday (11), pushed by investors’ panic in the face of the Trump government’s unpredictability and the growing fear of stagflation-a persistent inflation scenario combined with weak economic growth.

The S&P 500 index plummeted 2.7%, Nasdaq fell 4%and Dow Jones ceded 2%on one of the worst days of the year for financial market speculators. Technology giants saw billions evaporate: Tesla fell 15.4%, Nvidia retreated 5%, and Amazon and Alphabet shares followed the same path.

The numbers speak for themselves. Since February, Trump’s policies have cost $ 4 trillion to the stock market. Companies that sustained Wall Street’s optimism – especially Big Techs – went into free fall.

But in the center of the hurricane, Trump minimizes chaos. “There is a period of transition,” he disconcerted last Sunday (10), in an interview with Fox News. The phrase, dictated in an unusual tone for someone who sells certainties, was enough for the markets to respond with panic.

Playing at home, in football jargon, Trump poorly diverted from the banana peel thrown by the host of Sunday Morning FuturesMaria Business. Making reference to “growing concerns with a slowdown,” Bailing, he asked, “Do you expect a recession this year?”

“I hate to predict things like that,” Trump replied. “There will be a period of transition, because what we are doing is very large. We are bringing wealth back to the United States. This is a great thing, and there are always periods of adjustment. It takes a while, but I think in the end it will be great for us. ”

The market crisis, however, is not just a momentary reaction. The central fear is for the US to enter a stagflation cycle, something that the reserve was trying to avoid since the start of interest rates in 2022.

Stagflation occurs when the economy slows down, but inflation remains high, creating a dilemma for monetary policy. Fed president Jerome Powell had already indicated that inflation had been resisting the fall, but now the markets fear that Trump’s tariff squeeze accelerate this picture.

The new signs of discourse are clear. Consumer confidence indicators fell in February, and job growth was below expected, with 151,000 new vacancies created last month, weak performance for US standards. Unemployment rose to 4.1%, and sectors such as aviation and industry are already beginning to review down projections.

Despite the delicate picture, the White House insists on minimizing the problem. “Tariffs are a necessary adjustment to protect US jobs,” Trade Secretary Howard Lutnick told NBC. But the markets did not buy the thesis – and the fall of the assets shows that.

Trade war, market collapse and increasing distrust

Trump promised to do the “Great America Again.” But eight weeks after resuming the White House, it is doing the opposite: the US is isolated in the global economic scenario.

The new rates generated an immediate reaction. Canada retaliated with rates of $ 20.5 billion in US exports. Mexico already speaks of reprisals. The European Union is studying measures to protect its industries. China has imposed sanctions on American goods and prepares a new round of restrictions.

Protectionist climbing not only tensioning diplomatic relations, but also pressuring US prices. The logic is simple: high rates make imported products more expensive, which generates cost transfer to the end consumer. The impact should be felt mainly in sectors such as cars, electronics and food, further increasing inflation.

For US economists, Trump’s disordered tariff policy is at the center of the crisis. The expectation, until then, was that his economic team could at least stabilize the markets. But it seems that the president is willing to risk everything.

The signs are clear. The Federal Reserve already rules out interest cuts in the short term, which aggravates the fear of stagflation. The job market slows down. Companies like Delta Air Lines have already cut their profit projections in half. The industrial sector feels the first signs of retraction.

But in the White House, the order is to deny reality. “The American economy is stronger than ever,” said Commerce Secretary Howard Lutnick, while the bags sank.

The question left is: How long will Trump be able to support this narrative?

The price of instability

The collapse of the markets exposes a central contradiction of the Trump administration. The man who has promised “unprecedented wealth” now sees his government sink investors’ confidence, waging global trade, and devaluing US assets.

The possibility of stagflation – previously considered unlikely – now enters the radar as a real threat to the US economy.

Wall Street may even recover, but the market message has already been given. The president who sold himself as a master of the economy is now trapped by his own promises.

The recession, which Trump avoids naming, already seems to be lurking.