- The Dow Jones tumbled on Monday, falling back below 44,500.
- President Trump has pivoted on tariffs yet again, kicking the can on self-imposed deadlines.
- Despite waffling on the July 9 trade deadline, the Trump administration is back with fresh tariff threats.
The Dow Jones Industrial Average (DJIA) sank on Monday, falling back below key technical levels. The Trump administration added fresh tariff threats against key US trading partners to paper over another delay of previously imposed tariffs, sparking a new bout of risk aversion among investors who are growing weary of riding the whiplash tariff roller coaster.
Tariff buildup deepens despite another delay
The July 9 deadline for President Trump’s reciprocal tariffs, originally announced and delayed in early April, has now been pushed to the beginning of August as the Trump administration struggles to secure advantageous trade concessions from the rest of the planet. Outside of some preliminary agreements with China and the United Kingdom, and a small-scale trade arrangement with Vietnam, very little progress has been made on the Trump team’s mandate to squeeze trade deals out of 90 countries in 90 days.
Donald Trump announced the delivery of trade demand letters to countries including South Korea and Japan, warning that he intends to impose an additional 25% tariff on all US imports from both countries beginning on August 1 if they don’t play ball on trade negotiations. US Commerce Secretary Howard Lutnick also announced on Sunday that the Trump administration would be having a busy week, cautioning that several trade announcements would be made in the coming days. Commerce Secretary Lutnick opted not to reveal the names of any specific countries the US is close to inking trade deals on, a pattern that has repeated itself on a weekly basis since April.
Read more stock news: US stocks open lower as Trump threatens additional tariffs on BRICS nations
Dow Jones price forecast
The Dow Jones’s backslide on Monday has dragged the major equity index back below 44,500 following a multi-week grind back above the key technical level. The Dow Jones is still holding on the high side of the 44,000 handle, and price action is still tilted firmly into the bullish side despite a near-term pullback.
The Dow is still up 21% from April’s post-tariff bottom near 36,600, and the next technical target is new all-time highs above 45,000. On the low side, near-term technical support is priced in at the 50-day Exponential Moving Average (EMA) parked just below 43,000.
Dow Jones daily chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.