Dow Jones Drops by 260 Points Amid Global Trade Tensions

Major indices recorded losses on Monday, June 2, 2025, the first day of June negotiations, as investors were unpleasantly surprised by U.S. President Donald Trump’s plans to double tariffs on steel and aluminum to 50% from 25%, starting Wednesday, June 4, 2025. This move reignited uncertainty regarding trade policies. The industrial Dow Jones fell by 0.62% or 260 points due to escalating global trade tensions. The S&P 500 also declined by 0.26%, while the Nasdaq hovered around the break-even line. China responded to U.S. accusations that it violated a temporary trade agreement, accusing Washington of failing to uphold the deal—an indication that negotiations between the world’s two largest economies are worsening. After a brief pause following meetings in Geneva between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, tensions have resurfaced. A senior White House official stated today on CNBC’s Jim Cramer that Presidents Trump and Xi Jinping might speak this week. The 30-year U.S. Treasury bond has underperformed in 2025, with yields increasing for long-term durations while decreasing for 2-, 5-, and 10-year bonds. Such divergence is rare—last seen for an entire year in 2001—highlighting pressure on long-term bonds as investors demand extra compensation to lend to the U.S. government over such extended periods. Speculation has emerged that the Treasury Department may reduce or halt sales of its longest-term bonds.