Wall Street falls sharply as the chairman of the US Federal Reserve warns that tariffs could lead to slower growth and higher inflation.
President Donald Trump touted “great progress” in trade talks with Japan after unexpected intervention in negotiations as the uncertainty caused by his radical tariffs continues the stock market.
Trump made his comment Wednesday after making the surprising decision to take part in negotiations between his administration in Washington, D.C. and Japanese officials.
“It is a great honor to have just met a Japanese delegation on trade. Great progress!” Trump wrote about the true society after consultations, including US Treasury Secretary Scott Bescent, US Secretary of Commerce Howard Lutnick, and Minister of Economic Revitalization, Lyosei Akazawa.
After the meeting, Trump said he wanted to reach the deal before suspending at 90 days of “mutual” tariffs, and that the Japanese hope that the agreement will be sealed “as soon as possible.”
The Japanese Prime Minister said that Isba Island’s negotiations would not be easy, but the first round of talks “created the foundation for the next step.”
Like dozens of other US trading partners, Japan is hit by a baseline tariff of 10%, in addition to its 25% duties for automobiles, steel and aluminum, ranked among the highest exports in East Asian countries.
Japan, the best US security allies and its fourth largest trading partner, faces targeted 24% “mutual” tariffs under Trump’s “liberation day” trade measures, with almost all being suspended until July 9th.
“Everyone is very concerned about trade talks because Japanese industries are so closely integrated into the US economy,” Martin Schultz, chief policy economist at Fujitsu in Tokyo, told Al Jazeera.
“While there cannot be any winners in the trade war, we are very optimistic that we can achieve a consensual outcome. Japan is the largest investor in the US and is interested in investing more.”
“If both economies can remain on a growth trajectory, they will be able to achieve higher imports from the US,” Schultz added.
The US talks came as Wall Street suffered even greater losses amid continuing uncertainty over Trump’s trade rescue.
The Benchmark S&P 500 fell 2.24% on Wednesday, with the high-tech NASDAQ composite down 3.07%.
The losses follow a warning from US Federal Reserve Chairman Jerome Powell, where Trump’s sudden tariffs can tackle weak growth, higher unemployment and higher inflation.
“We may find ourselves in a challenging scenario where double mandart goals are tense,” Powell said in a speech to the Chicago Economic Club on Wednesday, referring to the US Central Bank’s biggest employment and stable price twin goals.
“If that happens, we consider how far the economy is from each target, and the potentially different time horizons where each gap is expected to close.”
US stocks have been on a roller coaster since Trump took office in January, alternating sharp dips and big jumps in his tariff announcements before and after.
Financial markets and businesses await signs that the US president is open to watering or disposing many of his tariffs in exchange for concessions from his US trading partners.
Trump administration officials say more than 75 countries have reached out to launch trade negotiations.
After the latest losses on Wall Street, the S&P 500 and Nasdaq have fallen by around 10% and 15% respectively since the beginning of the year.
Asian stock markets got off to a better start on Thursday. Japan’s benchmark Nikkei 225, South Korea’s Cospi, and Hong Kong’s Hangsen Index, each rose more than 0.5% in early trading.