Stock Market Plunges After Trump Unveils Tariffs
President Donald Trump put wide tariffs on imports on April 2, 2025, and named the day “Liberation Day” for US trade policy. The policies entail a general tariff of 10% on all foreign imports and supplementary rates for specific countries.
Legacy Trump’s Sweeping Tariffs and Market Reaction
President Donald Trump announced a universal 10% tariff on all foreign imports, alongside harsher levies for specific nations: 34% on China, 46% on Vietnam, 20% on the European Union, and 24% on Japan. The administration hopes to slow what it perceives as unfair trade practices and lower trade deficits.
The market reaction was brutal at first. The Dow Jones Industrial Average dropped 1,100 points, or 2.7%, and the S&P 500 and Nasdaq dropped more than 3% and 4.5%, respectively. These declines reflect investors’ concerns about future inflation and weakening global economies.
Economic Consequences and Inflation Concerns
Economists have warned that the tariffs can lead to stagflation in the U.S., where inflation rises and growth slows. Tariffs will raise consumer prices, particularly on imports such as fruits from Mexico. While some businesses will absorb the costs, others will pass them on to consumers.
With inflation already pressuring households, additional price hikes could slow consumer spending. Experts suggest that U.S. GDP growth could dip below 2%, a level not seen since the 2008 financial crisis (excluding the pandemic era).
Global Reactions and Retaliation Risks
Overseas reactions have been swift and condemnatory. European Commission President Ursula von der Leyen threatened extreme international economic consequences and indicated that the EU is on course to develop strategy measures, as well as likely tariffs on America’s tech giants like Google and Apple. Countries like South Korea and China have committed retaliations, risking the rising trade war across the globe.
Experts are concerned that such protectionist measures could discourage investment and deepen economic uncertainty. Uncertainty about the administration’s trade policy could also further complicate domestic and foreign actors’ reactions, opening up the possibility of a longer-term economic recession.
In response to the tariffs, investors are taking flight to havens, and gold prices are increasing, as well as demand for bonds and the Japanese yen. Prices of oil have also dropped by 6%, echoing concerns about declining global demand.
Final Thoughts
The imposition of these tariffs is a significant shift in U.S. trade policy with far-reaching implications for the global economy. Investors and policymakers alike will need to navigate the pitfalls of these protectionist measures and their ability to disrupt international trading relationships as the situation develops.
More:
- https://www.cnbc.com/2025/04/02/stock-market-today-live-updates-trump-tariffs.html
- https://apnews.com/article/stocks-markets-rates-tariffs-52dbb020a4c41122e31669c2da236d67
- https://www.theguardian.com/us-news/2025/apr/03/trump-tariffs-see-stocks-dive-and-investors-scramble-to-bonds-gold-and-yen
- https://www.overhereny.com/nintendo-switch-2-launches-june-5-at-449-99/