Wall Street Slumps as Trump’s Trade Policies Rattle Investors

Wall Street’s “fear gauge” jumped 14% today as traders grew increasingly anxious over Donald Trump’s trade war and its potential to push the US into recession.

The CBOE Volatility Index (VIX), commonly referred to as the “fear gauge,” has surged around 50% this quarter, putting it on track for its largest quarterly rise since early 2020, when the onset of the Covid pandemic wreaked havoc on the global economy.

Concerns over a potential US recession are mounting as consumer confidence declines, businesses grapple with increasing trade complexities, and investor anxiety rises.

US stocks remain deep in the red, with investors increasingly concerned that Donald Trump appears unfazed by the economic and market turmoil his policies may cause.

Here’s the latest market impact:

• Dow Jones Industrial Average: Down 516 points (-1.2%) at 42,285
• S&P 500: Down 130 points (-2.2%) at 5,639
• Nasdaq Composite: Down 648 points (-3.5%) at 17,547

Tesla continues to take a heavy hit, plunging 11.8% to $231.65—now more than 50% below its record high reached last December.

The Wall Street sell-off has driven up market volatility, as fears grow that escalating tariffs and trade wars could harm the US economy.

Economists warn that the risk of a “Trumpcession” is rising, as the president’s unpredictable approach to tariffs unsettles global markets. This was underscored by last week’s second consecutive pause on new US tariffs on Canadian and Mexican goods.

Kathleen Brooks of trading platform XTB criticized Trump’s priorities, stating: “He is putting political goals ahead of economic stability. His flip-flopping on tariffs and outdated ‘America First’ stance is dampening consumer spending and eroding confidence.”

Meanwhile, Wall Street economists have begun downgrading US growth forecasts, warning that Trump’s trade policies are proving more damaging than initially expected.

Goldman Sachs analysts on Friday raised the probability of a US recession from 15% to 20%, adjusting their outlook to factor in higher tariffs, rising inflation, and expected hits to GDP and employment.