President Donald Trump confirmed on Thursday that he might accept “phenomenal” trade offers from other countries if they benefit the United States. Speaking aboard Air Force One, he indicated he would consider such deals, despite earlier statements from White House officials ruling out changes to planned reciprocal tariffs. This uncertainty led to panic in the markets, with nearly $2 trillion wiped off the value of the S&P 500 in a single day. Trump assured that the economic shock was “temporary” and that the markets would recover soon. However, fears of global recession and long-term uncertainty continued to affect investor sentiment.
Trump’s Tariff Strategy and Market Reaction
In a new development, the White House announced a 10% base tariff set to start on April 5, followed by reciprocal tariffs beginning April 9. Investors were alarmed by these escalating trade tensions, particularly with the United States increasing import taxes on Chinese goods to 54%. These moves sparked fears of a prolonged trade war, affecting global markets and causing sharp declines in major stock indexes. Analysts warned that the ongoing trade conflict could lead to deep economic consequences, with potential long-term impacts on consumer behavior and investment planning.
Wall Street Faces Historic Losses
U.S. stock markets experienced their worst day since the pandemic, as the Dow Jones Industrial Average plummeted by 1,600 points, or 3.98%. This marked its steepest fall in years. The S&P 500 followed suit, falling by 4.84%, while the Nasdaq Composite suffered a nearly 6% drop. Tech stocks were hit hardest, with Apple leading the losses at 9.25%. Concerns about potential disruptions to sales in China sparked these declines, as Beijing has promised retaliation following the U.S.’s tariff hike on Chinese goods. Amazon and Meta also saw significant drops, losing 9% each, while Nvidia fell by 7.8%.
Other major tech stocks followed the downward trend, with losses ranging from 2% to 6%. Retail stocks were not spared, with brands like Nike, Lululemon, and Ralph Lauren seeing drops of 14.4%, 9.6%, and 16.3%, respectively. As the stock market spiraled, the U.S. dollar weakened sharply, dropping below 102 on the dollar index, marking its lowest level since October 2024. Investors flocked to safer currencies like the euro, yen, and Swiss franc. Treasury bonds also became a safe-haven investment, pushing 10-year Treasury yields down to 4.04%.
European Markets Hit by Trade Uncertainty
The impact of Trump’s tariff announcement was felt globally, as European stock markets also closed sharply lower. The Stoxx 600 index fell by 2.7%, Germany’s DAX dropped by 3.01%, and France’s CAC 40 declined by 3.31%. The imposition of a 20% tariff on European Union goods triggered a strong reaction from EU leaders, who expressed concerns over the economic fallout. French President Emmanuel Macron urged European companies to reconsider their investments in the U.S. in response to the tariffs.
Luxury brands, particularly those with significant exposure to the U.S. market, suffered severe losses. LVMH, Hermès, Richemont, and Kering saw drops of 5.62%, 3.51%, 6.32%, and 7.51%, respectively. Adidas, another major European brand, fell nearly 12% due to its global market reliance and exposure to the U.S. retail sector. The automotive industry was also significantly affected, with German automakers taking a hit from the 25% tariffs imposed on U.S. car imports. Volkswagen shares fell by 4.42%, BMW dropped 3.55%, and Porsche lost 3.06%.
Global Recession Fears Grow
As the trade war between the U.S. and 180 countries continues to unfold, analysts are increasingly concerned about the potential for a global recession. The rapid escalation of tariffs has left investors worried about prolonged economic uncertainty, which could have widespread effects on consumer spending and international trade. With markets reacting negatively to these developments, it is clear that both U.S. and European economies may face significant challenges in the coming months.
The fallout from President Trump’s escalating tariff policies has sent shockwaves through global markets, leading to historic losses on Wall Street and significant declines in European stocks. Investors are on edge, concerned about the long-term impact of the trade war on both U.S. and global economies. With a potential global recession looming, market experts are urging caution and a reassessment of investment strategies. As the situation continues to develop, it remains to be seen whether the U.S. government will backtrack on its trade policies or if further escalation is inevitable.