U.S. stock markets fell back from record highs following new tariff threats from President Donald Trump, reviving concerns over trade uncertainty, AFP reported.

Last week, the S&P 500 and Nasdaq closed at all-time highs, supported by strong U.S. employment data and the passage of Trump’s expansive fiscal package, which includes an extension of tax cuts.

However, Trump announced intentions to impose 25% tariffs on imports from Japan and South Korea if trade agreements are not reached with Washington. He also threatened 10% tariffs on countries aligning themselves with the rising BRICS bloc. These moves heightened investor anxiety, particularly at a time when some were already expressing concern over inflated market valuations.

The Dow Jones Industrial Average fell by 0.9% to 44,406.36 points. The S&P 500 declined by 0.8% to 6,229.98, while the tech-heavy Nasdaq Composite dropped 0.9%, closing at 20,412.52.

“The likelihood that Trump’s statements are merely a negotiation tactic is why the losses weren’t even more severe,” said Steve Sosnick of Interactive Brokers. “No one wants to overreact negatively right now, which is why we’re seeing a sell-off, but not a panic.”

Trump’s trade policy had taken a back seat in recent weeks as Congress debated his fiscal plan, which includes controversial cuts to the healthcare system and other social programs.

The conflict between Iran and Israel had also overshadowed trade issues, but the topic inevitably returned to focus after the White House set a July 9 deadline for concluding trade deals. The administration has now stated that tariffs will be raised on August 1 for countries that fail to reach an agreement.

Among individual companies, Tesla shares plunged 6.3% after Trump harshly criticized CEO Elon Musk over his plans to launch a new political party in opposition to the president’s flagship legislation, the so-called “Big Beautiful Bill.”

The clash between Trump and the world’s richest man deepened at a time when investors had hoped Musk would shift focus back to Tesla and his other ventures, rather than engaging in politics. | BGNES