STEVE INSKEEP, HOST:
President Trump's tariffs and his remarks about a recession led to the worst day for the stock markets this year.
A MARTÍNEZ, HOST:
Now, the Dow tracks 30 major U.S. companies. It fell 2%, almost 900 points. The broader NASDAQ and S&P 500 are also sharply down. Now, these things always move up and down, but the markets overall have given back all their gains since last November's election - and then some.
INSKEEP: And NPR financial correspondent Maria Aspan is following all of this. Good morning.
MARIA ASPAN, BYLINE: Good morning.
INSKEEP: OK. So why was there such a big drop yesterday?
ASPAN: Well, President Trump has done and said a lot of different things about tariffs in the past week, and investors have been feeling the whiplash. Just to recap, Steve, Trump's new 25% taxes on imports from Canada and Mexico went into effect last week. Then he started giving out reprieves, first to automakers, then to Mexico, then to Canada.
INSKEEP: Yeah.
ASPAN: But the fact that Trump actually let the tariffs go into effect was a big deal and showed they might be more than just a negotiating tactic. And he's continuing to talk about them happening long-term, despite all the warnings about how much they could hurt the U.S. economy. This all really hit home on Sunday. Fox News Anchor Maria Bartiromo aired an interview with Trump, and this was the bit that got everyone worried.
(SOUNDBITE OF TV SHOW, "SUNDAY MORNING FUTURES")
MARIA BARTIROMO: Are you expecting a recession this year?
PRESIDENT DONALD TRUMP: I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing.
ASPAN: So Trump didn't rule out the possibility of a recession. Now, it's important to note that his commerce secretary, Howard Lutnick, did. He told NBC News in a different interview that there's, quote, "no chance of a recession." But yesterday Wall Street seemed to be listening to Trump, not Lutnick.
INSKEEP: I guess we should just state the reality. There's always a chance of a recession. You would hope it would be in the future, but you don't know. I'm also thinking about the narrative that you lay out there, Maria. And it's not solely the threat of Trump's, but also the unpredictability. They're on, they're off, they're sideways. You just don't know. So how concerned should investors be?
ASPAN: Well, one of the big concerns over tariffs is that they could really hike the prices. Consumers pay for everything from cars to groceries. That'll contribute to inflation and hurt the wider economy. And we've seen companies, including Target and Best Buy, warn that, yeah, tariffs are going to lead to higher prices. So that's a huge consideration for consumers and for consumer-facing businesses.
And then, as you point out, Steve, all of the back and forth with tariff policy has created a lot of swings in the stock market, and that volatility makes it hard to plan for both consumers and investors. I talked about this last week with Anna Tavis. She's a management professor at NYU, where she talks to executives across corporate America.
ANNA TAVIS: Businesses don't like uncertainty.
ASPAN: And now we're starting to see that uncertainty creeping across our economy. For example, yesterday, Delta Airlines cut its forecast, citing reduced consumer and corporate confidence and economic uncertainty.
INSKEEP: I noticed that some stocks are doing worse than others. The tech-heavy NASDAQ had its worst day in years. Is something else going on in the economy we should worry about?
ASPAN: So tech companies like Apple and Nvidia are some of the hottest stocks, so they're also the most expensive, and some of their losses may have just been investors realizing, we're spending too much for what we're getting. But Trump's comments over the weekend really seemed to signal a shift in how he thinks about the market. He used to really rely on the market's performance as a kind of proxy approval rating, and now he seems to be signaling that he's more focused on tariffs, even if the market is unhappy and even if they cause more immediate economic pain.
INSKEEP: NPR's Maria Aspan. Thanks for your insights. Really appreciate it.
ASPAN: Thank you. Transcript provided by NPR, Copyright NPR.
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