On 1 August 2025, President Donald Trump made two major moves that sent financial markets into disarray.
First, he announced a sweeping overhaul of US trade policy, raising tariffs on dozens of countries. Then, just hours after the release of disappointing employment data, he dismissed the head of the Bureau of Labour Statistics, accusing her of manipulating figures to harm his administration.
Together, the shock tariff policy and the unexpected firing triggered widespread concern about political interference and economic instability, leading to sharp losses across global markets and over $800 million in crypto liquidations.
Tariff Announcement From Donald Trump
Trump’s newly announced tariff plan divides countries based on their trade balance with the United States.
If a country imports more from the US than it exports to it, it falls into the “surplus” category and will continue to face a 10% import tariff. Only a small number of countries qualify under this condition.
The vast majority of nations, however, run a trade deficit with the US. These countries now face a higher baseline tariff of 15%, replacing earlier reciprocal measures that were introduced in April. This group includes about 40 countries.
In addition, 26 countries have been hit with even steeper rates, ranging from 18% to 41%, due to what the Trump administration describes as “excessive trade deficits.” The list includes:
- Laos and Myanmar at 40%
- Canada at 35% for non-exempt goods
- Indonesia, Malaysia, and the Philippines at 19%
- India and Kazakhstan at 25%
- Switzerland at 39%
- Vietnam and Taiwan at 20%
Goods from Mexico will continue to face a 25% tariff for another 90 days following direct talks between Trump and Mexican President Claudia Sheinbaum. An earlier plan to raise the rate to 30% was suspended at the last moment.
The new tariffs are scheduled to take effect on 7 August, except for Canadian imports, which have already shifted to the new 35% rate as of 1 August at 12:01 am. The White House says the delay allows US Customs and Border Protection time to update procedures.
Notably, China and the United Kingdom are temporarily exempt due to ongoing trade frameworks. However, the deal with China is set to expire in less than two weeks, and there is no guarantee it will be renewed.
This new trade policy is a marked departure from the multilateral agreements the US has relied on for decades. Trump has justified the tariffs as necessary to restore balance and support domestic manufacturing.
However, legal experts have challenged the authority under which they are being imposed. The administration is using the International Emergency Economic Powers Act, which is typically reserved for sanctions, not trade measures.
A federal court previously ruled that this was a misuse of the law, and the matter is now under appeal.
Markets Crash As Trump Fires Labour Data Chief And Pushes Ahead With Tariffs
The market response was swift and severe. Investors had expected some economic friction, but few anticipated a combined political and economic shock.
On the same day the tariffs were announced, the Bureau of Labour Statistics published new jobs data showing that only 73,000 positions were added in July. This fell far short of expectations, which ranged from 110,000 to 115,000.
Previous estimates for May and June were revised downward by a combined 258,000. The unemployment rate rose to 4.2%, and labour force participation dropped to 62.2%.
Shortly after the report was released, Trump fired Erika McEntarfer, the BLS commissioner, accusing her of “rigging” the numbers. On social media, he claimed the data was manipulated to make him and the Republican Party look bad.
The move was widely condemned. Senate Democratic leader Chuck Schumer said Trump was “shooting the messenger.” Former Treasury Secretary Larry Summers called the decision something one would expect from an authoritarian country.
Two former BLS commissioners issued a statement saying the dismissal undermined trust in all government statistics.
Despite the BLS following long-standing statistical procedures, Trump told reporters, “I believe the numbers were phoney… so you know what I did? I fired her, and you know what I did? The right thing.”
Analysts noted that during Joe Biden’s presidency, BLS data was also revised down several times, with no political fallout. However, this month’s revisions were the largest outside of the pandemic period since 1979.
McEntarfer, who had served in government for over 20 years and was confirmed with bipartisan support, described her role as “the honour of my life.” Her position will now be temporarily filled by Deputy Commissioner William Wiatrowski.
The combination of an economic policy shock and political interference in data created deep concern across markets.
The Dow Jones Industrial Average closed down by 542 points, or 1.23%. The S&P 500 dropped 1.60%, while the Nasdaq fell 2.24%. It was the worst day for equities in several months. Bond markets also reacted, and the US dollar dipped slightly against major currencies.
Traders quickly adjusted their expectations for monetary policy. The likelihood of a Federal Reserve rate cut in September jumped from 38% to 86.5% in one day.
The damage was even worse in the crypto space. Over 188,000 traders were liquidated in 24 hours, with total losses exceeding $805 million. More than 90% of those were long positions.
Bitcoin fell from $123,000 to around $114,000. Ethereum, XRP, and Dogecoin also dropped between 2% and 4%.
Crypto markets, often seen as loosely correlated to traditional finance, responded in the same way as equities.
Risk appetite vanished across the board. Even high-growth tech stocks sold off alongside decentralised assets. Analysts pointed out that in moments of uncertainty, investors often retreat from all volatile assets at once, regardless of their underlying value or structure.
Conclusion
President Trump’s trade overhaul and his dismissal of the BLS commissioner have raised deep questions about the direction of US economic policy.
The tariffs represent a major departure from decades of negotiated trade frameworks, and the firing of a nonpartisan statistical official has shaken confidence in the neutrality of government data.
Markets responded with a clear vote of no confidence. Stock indices dropped, interest rate expectations shifted, and the crypto market saw one of its sharpest single-day selloffs this year.
As the new tariffs approach their implementation date and legal challenges continue, investors and observers are preparing for further instability.