The financial markets reacted negatively to President Trump's implementation of tariffs labeled as "Liberation Day." Despite the market turmoil, Trump defended his belief in using substantial tariffs to address the US trade deficit through social media posts. He emphasized that imposing tariffs on countries like China and the European Union is generating significant revenue for the US and aims to reduce the trade surplus that has occurred under the Biden administration.

Trump recently announced a plan to impose a baseline tariff of 10% on all imports globally, along with reciprocal tariffs targeting major trading partners such as China and the EU, with levies expected to exceed 50% and 20%, respectively. These additional tariffs are scheduled to come into effect on April 9. Economists predict that the average tariff rate under Trump's plan could reach nearly 30%, the highest seen in over a century.

In response to the market reaction, US stock indexes experienced significant declines, with the S&P 500 and Nasdaq Composite registering losses. Markets in Asia also faced volatility at the start of the trading week. Investors sought the safety of US Treasury bonds as a result, causing the 10-year Treasury yield to drop to 3.92%, its lowest level since October.

Trump's administration, including Treasury Secretary Scott Bessent, considers lowering Treasury yields a key objective of the economic agenda. Trump, addressing the recent market sell-off, indicated that sometimes tough measures are necessary to address economic issues, emphasizing that such policies were not intended to trigger a market downturn.

President Trump's comments were made aboard Air Force One, where he highlighted the need for corrective actions to tackle economic challenges. The administration is focused on implementing policies that address trade imbalances, despite the short-term market reactions.