US stocks fell again on Thursday after a historic rally following Donald Trump’s shock retreat on Wednesday on the hefty tariffs he had just imposed on dozens of countries.
The falls came as the president blamed “transition problems” for the market reaction and the sell-off deepened after a White House clarification noted that total tariffs on China had been raised by 145% since Trump took office.
Speaking at the White House, Trump said: “We think we’re in very good shape. We think we’re doing very well. Again there will be a transition cost, transition problems, but in the end it’s going to be a beautiful thing.”
On CNN, former US treasury secretary Janet Yellen called Trump’s economic policies the “worst self-inflicted wound” an administration had ever imposed on a “well-functioning economy”.
The sell-off comes as Democrats continue to react with anger over the sudden retreat that rattled markets, while Republicans praised Trump’s “art of the deal” in action, referencing Trump’s 1987 book.
By the end of Thursday, the Dow was down 2.5% after soaring on Wednesday afternoon. The Nasdaq Composite was down more than 4%, after posting its biggest gain in more than two decades on Wednesday, and the S&P 500 down 3.4%.
The market seems to be in a state of fatigue after a rollercoaster week. Stocks were even unresponsive to news on Thursday morning that the European Union announced it will suspend 25% retaliatory tariffs against US imports and new data showed inflation in the US cooled to 2.4% in March – both would typically be cause for optimism on Wall Street.
Trump said in an abrupt announcement on Wednesday that he would be implementing a 90-day pause on his tariff plan, and that goods entering the US from most countries would now face a 10% blanket tariff until July, except for Chinese exports, which he said would face tariffs totaling 145% effective immediately – 125% in “reciprocal” tariffs plus 20% already imposed for China’s alleged role in the fentanyl crisis.
Republican lawmakers praised the decision to pause the tariffs, with the House speaker, Mike Johnson, stating on social media: “Behold the ‘Art of the Deal.’ President Trump has created leverage, brought MANY countries to the table, and will deliver for American workers, American manufacturers, and America’s future!”
Before the pause was announced, a small but growing number of Republican lawmakers and Trump supporters in the business world expressed concerns about the risks of the president’s tariff policy.
By Wednesday afternoon, many were praising Trump for the rollback as part of a purported strategy.
Bill Ackman, a billionaire hedge fund manager and Trump supporter who advocated for Trump to pause his trade war over the weekend, reacted to the announcement saying that “this was brilliantly executed by @realDonaldTrump. Textbook, Art of the Deal.”
The benefit of Trump’s approach, Ackman claimed, “is that we now understand who are our preferred trading partners, and who the problems are. China has shown themselves to be a bad actor. Our counterparties also have a taste of what life is like if they don’t take down their trade barriers. This is the perfect set-up for trade negotiations over the next 90 days.”
But some industry leaders criticized the administration’s back-and-forth and tariff decisions.
On Thursday, Amazon’s CEO, Andy Jassy, said the company was still waiting to see the impact of the tariffs but warned third-party sellers may “pass that cost on” to consumers.
“The effective tariff rate is actually HIGHER with the pause than it was as announced on April 2, due to the tariffs on China,” Diane Swonk, the chief economist of the professional services firm KPMG, wrote on social media. “There will be some diversion through connector countries. However, the effective tariff rate now peaks at 30.5% during the pause. That is worse than our worst case scenarios.”
While Republicans and White House officials praised Trump’s decisions, Democratic lawmakers such as Senator Chuck Schumer pushed back. Schumer told his supporters that “this chaos is all a game to Donald Trump”.
“He thinks he’s playing Red Light, Green Light with the economy,” Schumer said. “But it is very real for American families.”
Some Democrats have made accusations of possible market manipulation.
“These constant gyrations in policy provide dangerous opportunities for insider trading,” Senator Adam Schiff said. “Who in the administration knew about Trump’s latest tariff flip-flop ahead of time? Did anyone buy or sell stocks, and profit at the public’s expense? I’m writing to the White House – the public has a right to know.”
The New York representative Alexandria Ocasio-Cortez echoed similar concerns, urging any member of Congress who purchased stocks over the last two days to disclose that.
“I’ve been hearing some interesting chatter on the floor,” she said. “Disclosure deadline is May 15th. We’re about to learn a few things. It’s time to ban insider trading in Congress.”
The Democratic House whip, Katherine Clark, wrote: “Two hours before announcing his tariff pause, Trump told his paid Truth Social subscribers it was ‘a great time to buy’ on the stock market. Corruption is the name of their game.”
The Nevada representative Steven Horsford questioned the US trade representative, Jamieson Greer, asking the representative during a committee hearing whether the climbdown was market manipulation.
“How is this not market manipulation?” Horsford asked, to which Greer responded: “No.”
“If it was always a plan, how is this not market manipulation?” Horsford asked again.
“Tariffs are a tool, they can be used in the appropriate way to protect US jobs and small businesses, but that’s not what this does,” Horsford said. “So if it’s not market manipulation, what is it? Who’s benefiting? What billionaire just got richer?”
