Wall Street closes sharply lower as US Federal Reserve chair warns tariffs could lead to slower growth, higher inflation.
United States President Donald Trump has touted “big progress” in trade talks with Japan after making an unexpected intervention in the negotiations, as uncertainty caused by his sweeping tariffs continues to roil stock markets.
Trump made his comments on Wednesday after making the surprise decision to sit in on negotiations between his administration and Japanese officials in Washington, DC.
“A Great Honor to have just met with the Japanese Delegation on Trade. Big Progress!” Trump wrote on Truth Social after the talks, which included US Treasury Secretary Scott Bessent, US Commerce Secretary Howard Lutnick and Economic Revitalization Minister Ryosei Akazawa.
Akazawa said after the meeting that Trump wanted to reach a deal before the end of his 90-day pause on his “reciprocal” tariffs, with the Japanese hoping to see the agreement sealed “as soon as possible.”
Japanese Prime Minister Shigeru Ishiba said the negotiations would not be easy, but the initial rounds of talks had “created a foundation for the next steps”.
Like dozens of other US trade partners, Japan has been hit with a 10 percent baseline tariff in addition to duties of 25 percent on cars, steel and aluminium, which rank among the East Asian country’s top exports.
Japan, a top US security ally and its fourth-largest trade partner, is also facing a targeted 24 percent “reciprocal” tariff under Trump’s “liberation day” trade measures, nearly all of which have been paused until July 9.
“Japan’s industry is so closely integrated in the US economy that everyone is very concerned about the trade talks,” Martin Schulz, chief policy economist at Fujitsu in Tokyo, told Al Jazeera.
“Although there cannot be winners in a trade war, we are also quite optimistic that agreeable results can be achieved. Japan is the largest investor in the US and interested in investing more.”
“If both economies can be kept on a growth track, higher imports from the US become possible,” Schulz added.
The US-Japanese talks came as Wall Street racked up further heavy losses amid continuing uncertainty over Trump’s trade salvoes.
The benchmark S&P 500 closed 2.24 percent lower on Wednesday, while the tech-heavy Nasdaq Composite fell 3.07 percent.
The losses followed a warning by US Federal Reserve Chair Jerome Powell that Trump’s steep tariffs could leave the US economy grappling with weak growth, rising unemployment and higher inflation all at once.
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said in a speech to the Economic Club of Chicago on Wednesday, referring to the US central bank’s twin goals of maximum employment and stable prices.
“If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”
US stocks have been on a rollercoaster ride since Trump’s inauguration in January, alternating between sharp dips and big jumps amid his back-and-forth tariff announcements.
Financial markets and businesses have been on tenterhooks waiting for signs that the US president is open to watering down or scrapping many of his tariffs in exchange for concessions from US trading partners.
Trump administration officials have said that more than 75 countries have reached out to begin negotiations on trade.
After the latest losses on Wall Street, the S&P 500 and Nasdaq are down about 10 percent and 15 percent, respectively, since the start of the year.
Asian stock markets got off to a better start on Thursday, with Japan’s benchmark Nikkei 225, South Korea’s KOSPI and Hong Kong’s Hang Seng Index each rising more than 0.5 percent in early trading.