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On August 1, 2025, US stock markets were confronted with a sharp decline after the announcement of President Donald Trump of new rates that trade with large international partners. This was amid the release of a disappointing job report for the month of July. The industrial average of Dow Jones fell more than 500 points and represented the worst day since May of the same year. The S&P 500 and Nasdaq also saw considerable losses, with the Nasdaq falling 2.2%because the sentiment of investors was soured across the board.
New rates start on August 7
The rates, which will come into effect on 7 August 2025, will impose rates from 10% to 41% on imports from 66 countries, including important trading partners such as Canada, the European Union and Taiwan. According to the administration, these rates are aimed at strengthening the production of American production and to claim stronger leverage in international trade negotiations. However, economists and business leaders have warned that rates can increase the costs for American consumers and companies, which may lead to inflationary pressure.
The markets quickly responded negatively to the announcement and the CBOE Volatility Index (VIX), often referred to as the ‘anxiety meter’, with which the growing concern about future economic stability was indicated.
Disappointing job report increases alarm bells
The worsening of the economic uncertainty was the last job report of the American labor department, which showed that only 73,000 jobs were added in July – under the expected 100,000. While the unemployment rate remained stable at 4.2%, the overwhelming job growth has increased alarms over the potential for an economic delay. The matte report suggests that companies can hesitate to hire, and the overall demand within the economy can be weakened.
Business profits influenced by rates and economic pressure
Although reports from the company profits were largely positive, with Tech giant Apple recorded RECORD from Q2 Services turnover of $ 27.42 billion, the announcement of the new rates has expressed concern about the cost effects. For example, Apple projected an additional cost of $ 1.1 billion in costs because of the rates, which contributed to a slight dip in his share price. Moreover, the shares of Amazon fell by 8% after a disappointing quarterly report of his cloud computing unit.
The path forward for the American economy
With markets rattling through escalating trade tensions and signs of a cooling market, analysts predict constant volatility. Some suggest that the American Federal Reserve may have to reconsider interest rate increases if the economic situation continues to deteriorate.
Read also: December job report beats expectations, unemployment applies to 3.7%
