Trump announces dramatic tariff changes – economy in danger!

Trump announces dramatic tariff changes – economy in danger!

President Donald Trump announced on May 16 that the US would announce new tariffs on certain trading partners within two to three weeks. This comes in a busy international context where global markets are already under pressure and uncertainty exists. Trump emphasized in his statement that it was not possible for the US to negotiate individual trade agreements with every country. US Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick will be briefed and are expected to send letters with further details on the upcoming tariffs. However, the exact contents of these letters remain unknown and it is unclear whether the affected countries will be given a specific timetable or conditions for adjusting their own tariffs.

In addition to the upcoming tariff changes, the renowned rating agency Moody’s recently downgraded the US credit rating from AAA to Aa1. This decision is significant as it reflects concerns about rising national debt and interest costs. Moody's noted that there is no agreement between the US government and Congress on effective measures to reduce budget deficits. This uncertainty could negatively impact investor confidence and increase borrowing costs for the US.

Market reactions and economic implications

However, the market reaction to the downgrade was surprisingly calm. The US stock market showed positive development as the S&P 500 rose 0.7% to 5,958 points. The Nasdaq Composite Index gained 0.52% to 19,211 points, while the Dow Jones Industrial Average rose 0.78% to 42,655 points. This week, the S&P 500 even gained 5.3%, and technology stocks benefited from an agreement between the US and China to postpone planned tariffs.

Despite these positive market moves, the credit downgrade had not gone unnoticed and leading economic analysts expressed concern. Stephen Moore called the move “absurd” and pointed out that markets initially reacted with surprise. The fact that Moody's is the last of the three major rating agencies to withdraw the highest rating from the United States represents a significant turning point in the assessment of the country's economic stability. S&P and Fitch had previously taken similar measures.

Political reactions

Amid these developments, there were also political reactions. White House communications director Steven Cheung attacks Moody's chief economist Mark Zandi, a well-known Trump critic who previously worked for Obama and Clinton. This is part of a larger political drama unfolding as Trump's tax cut plans face opposition in the House of Representatives. Five Republican lawmakers have joined Democrats in blocking these plans. Experts warn that Turkey could add more than $5 trillion to the country's debt within 10 years, posing further challenges to the economy.

Looking forward, the coming months will be critical to see how the U.S. government responds to the challenges. Moody’s warnings clearly show that the USA is facing significant economic difficulties that could affect not only the domestic but also the international financial market. Market pressures and tight fiscal conditions will continue to dominate proceedings as the administration prepares for upcoming decisions on tariffs.