Wall Street experiences significant declines as the chair of the US Federal Reserve cautions that tariffs may result in slower growth and increased inflation.
President of the United States, Donald Trump, has praised “significant progress” in trade discussions with Japan following his unexpected involvement in the negotiations, as the uncertainty stemming from his extensive tariffs continues to disrupt stock markets.
Trump made these statements on Wednesday after he made the surprising choice to participate in discussions 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 posted on Truth Social after the meetings, which involved US Treasury Secretary Scott Bessent, US Commerce Secretary Howard Lutnick, and Economic Revitalization Minister Ryosei Akazawa.
Following the meeting, Akazawa remarked that Trump aimed to finalize an agreement before the conclusion of his 90-day suspension on his “reciprocal” tariffs, with Japanese officials eager to see a deal established “as soon as possible.”
Japanese Prime Minister Shigeru Ishiba acknowledged that the negotiations would be challenging, but the initial rounds of discussions had “laid the groundwork for the next steps.”
Similar to numerous other US trade partners, Japan is encountering a 10 percent baseline tariff alongside 25 percent duties on cars, steel, and aluminum, which are among the nation’s principal exports.
As a key US security ally and its fourth-largest trade partner, Japan is also facing a targeted 24 percent “reciprocal” tariff under Trump’s “liberation day” trade policies, the majority of which have been suspended until July 9.
“Japan’s industry is so tightly integrated into the US economy that there is widespread concern regarding the trade discussions,” stated Martin Schulz, chief policy economist at Fujitsu in Tokyo, during an interview with Al Jazeera.
“Though there can be no winners in a trade war, we maintain optimism that favorable outcomes can be reached. Japan is the largest investor in the US and is keen on increasing investments,” Schulz added.
“If both economies can maintain their growth trajectories, a rise in imports from the US will become feasible,” Schulz further noted.
These US-Japanese discussions unfolded as Wall Street faced further substantial losses amid ongoing uncertainty related to Trump’s trade measures.
The benchmark S&P 500 concluded 2.24 percent lower on Wednesday, while the tech-focused Nasdaq Composite dropped 3.07 percent.
The declines followed a warning from US Federal Reserve Chair Jerome Powell that the steep tariffs imposed by Trump could lead the US economy to experience weak growth, rising unemployment, and increased inflation all simultaneously.
“We may find ourselves in a difficult situation where our dual-mandate objectives are at odds,” Powell stated during a speech at the Economic Club of Chicago on Wednesday, referencing the US central bank’s goals of maximizing employment and ensuring stable prices.
“If such a situation were to arise, we would assess how far the economy is from each target and the potentially varying timeframes over which these gaps might be expected to close.”
Since Trump’s inauguration in January, US stocks have undergone a tumultuous journey, fluctuating between sharp declines and significant rebounds due to his inconsistent tariff announcements.
Financial markets and industries have been on high alert, awaiting indications that the US president might be willing to soften or eliminate several of his tariffs in return for concessions from US trading partners.
Officials from the Trump administration have reported that over 75 countries have approached them to start trade negotiations.
After the recent losses on Wall Street, both the S&P 500 and Nasdaq have declined by approximately 10 percent and 15 percent, respectively, since the beginning of the year.
Asian stock markets began on a positive note on Thursday, as Japan’s benchmark Nikkei 225, South Korea’s KOSPI, and Hong Kong’s Hang Seng Index all saw early trades rise by more than 0.5 percent.
