On Thursday President Donald Trump signed an executive order to that effect. This order imposes new tariffs on almost 70 different countries in an attempt to redefine U.S. trade policy. The executive order lays out new tariff rates between 10% and 41%. This is a notable change of course from the administration’s overall approach to international trade.
This new tariffs announcement comes just hours before the release of the monthly manufacturing jobs report. This report illustrates a significant slowdown in hiring. Back in July, the U.S. economy only created 73,000 new jobs. That would be a big miss compared to the average 130,000 net new jobs added per month this year. Investors have a right to be concerned over this poor performance. Worse, those job growth numbers for the prior months of May and June were revised dramatically downwards.
A high-ranking official from the Trump administration described these tariffs as a first step towards a “new system of trade.” This comment suggests that there’s a long-term objective to realign U.S. economic relations in the region. These new tariffs are very similar to the reciprocal tariffs that were announced on April 2. Then, due to a sudden sharp stock market selloff and spike in bond yields, their rollout was pushed back by three months.
With Trump having imposed a deadline of August 7 for their introduction, the urgency behind getting these tariffs implemented was substantial. To be fair to investors, they were right to panic at this news. Consequently, the Dow Jones Industrial Average tanked by 615 points, or 1.3%, with the broader S&P 500 sinking by 1.6%.
Bret Kenwell, a U.S. investment analyst at eToro, explained how the jobs report shook major market performance. He stated, “Today’s jobs report was underwhelming as it missed economists’ expectations, but it’s the stark revisions to the prior two months that really stands out.” He further added that the combination of weak job growth and new tariffs “may have thrown some cold water on the rally.”
The value of these tariffs is primarily political. The new tariffs ostensibly take aim at China’s unfair trade practices. They’re about to make a huge impact on all imports. That’s because earlier tariffs have already gone through the whole economy over the last several months. This new reality has introduced confusion and frustration for the business community and consumers alike.
