**Market Turmoil Deepens as Trump Signals Economic 'Transition'**

Investors are reacting to President Trump's warnings about a "transition" in the US economy, with the S&P 500 experiencing significant drops and concerns about inflation looming large.

A noticeable downturn in the US stock market unfolded on Monday, accelerated by heightened worries about the economic ramifications of ongoing trade disputes. The S&P 500, reflecting the performance of major American firms, saw a decline of around 2% in early trading. Concurrently, the Dow Jones Industrial Average dropped by 0.9%, while the tech-heavy Nasdaq composite saw a steeper fall of over 3.5%.

This market sell-off coincided with President Donald Trump's evasive responses to inquiries regarding a potential recession or inflation caused by his tariff policies. Instead, Trump described the economy as undergoing a "period of transition." In contrast, Commerce Secretary Howard Lutnick asserted that the US would not enter a recession, though he conceded that increased tariffs could lead to higher prices for certain goods.

Concerns surrounding tariffs—taxes levied on imports—are pushing investors to reconsider the economic outlook. Rachel Winter, an investment manager at Killik & Co, stressed that the current tariffs imposed by Trump are likely to inevitably result in inflation. Economist Mohamed El-Erian remarked that recent market fluctuations signify an adjustment in investor expectations, who perhaps underestimated the potential fallout from a trade war amid earlier optimism surrounding Trump's deregulation and tax-cut strategies.

Several stocks faced disappointing performance on Monday, with Tesla plummeting by 8%, while tech giants Nvidia and Meta fell by over 4%. In an interview with Fox News, Trump acknowledged the prevailing concerns and hinted at the long-term benefits of his policies, saying the nation is "bringing wealth back to America."

The impacts of Trump's recent tariff announcements were felt widely. Following the imposition of 25% tariffs on imports from Mexico and Canada, various goods were exempted shortly thereafter. Meanwhile, tariffs on Chinese products were doubled to 20%, inciting retaliation in the form of new tariffs on US agricultural exports effective Monday, penalizing items such as chicken, beef, pork, wheat, and soybeans with tariffs ranging between 10% to 15%.

In response to America’s trade measures, Ontario premier Doug Ford declared a 25% surcharge on energy exports heading to the US as a retaliatory measure, warning he would consider shutting off electricity supplies entirely if tensions escalate. Commerce Secretary Lutnick argued that while foreign goods might become more expensive, American-produced items would become cheaper, assuring there would be no recession in the US.

Former US Commerce Department official Frank Lavin expressed skepticism about the trade war spiraling out of control. Yet he acknowledged that tariffs, while likely to diminish over time, will still impose a considerable burden on the American economy. Han Shen Lin, a consultancy director, noted that both nations are engaged in a tit-for-tat approach, reflecting their unwillingness to yield. He observed that China is increasingly pivoting towards strengthening its domestic economy due to the limitations of its previous export-driven growth model.