Stock markets erased many of their previous week’s declines as tariff fears are once again back in focus.

Stocks are down as traders brace for the key Fed decision on interest rates, as tariff fears reemerge. On Tuesday, May 6, DOW Jones lost 404 points, or 0.98%, trading at 40,814, while the S&P 500 was down 0.84% and the Nasdaq dropped 1.00%.

Traders were concerned after U.S. President Donald Trump made several remarks that suggested that tariff relief is unlikely. Over the weekend, Trump announced a 100% tariff on foreign movies and stated that there were no plans to talk to China’s President Xi Jinping this week.

What is more, Trump hinted at a new tariff on pharmaceuticals, which will be announced over the next two weeks. He added that he would balance the cost for consumers by reducing the regulatory burden on U.S. pharmaceutical producers.

Among the biggest losers today Tesla, which registered a 2.46% decline, thanks to ongoing troubles in Europe. In the UK, consumers registered only 512 new Tesla cars in March, down 62% from a year earlier. These figures reflect similar declines in Germany, France, Sweden, and more.

Tariffs cause record-high U.S. trade deficit

Recent figures also showed that the U.S. trade deficit hit a record high in March, reaching $140.5 billion. The figure doubled over the last year, which stood at $68.6 billion in March 2024. The deficit was a reaction to the tariffs, as companies rushed to import as much as possible before higher rates took place.

According to a report from the Commerce Department on Tuesday, the U.S. imported a record amount of goods from 10 countries. These included Mexico and Vietnam, but not China. Notably, imports from China were the lowest in five years and will probably drop further due to the continued 145% tariff rate.