In a dramatic market collapse, the U.S. stock market witnessed an unprecedented loss, shedding over $5 trillion in just two days. This financial turmoil was ignited by President Donald Trump's controversial hike in tariffs against key trading partners, sparking the worst market rout since the COVID-19 pandemic rocked the globe. Investors were left reeling as the S&P 500 plunged by 6%, the Dow Jones Industrial Average tumbled 5.5%, and the tech-heavy Nasdaq dipped 5.8%, crossing into bear market territory.
The initial blow came from Trump’s decision to slap hefty tariffs, notably a 25% blanket rate on all foreign-made cars and specific increases such as 20% on the European Union and 24% on Japan. The aftermath was swift and severe, prompting China to retaliate with its own massive 34% tariff on all U.S. imports, effective from April 10. The retaliatory move from China stoked fears of an enduring trade conflict, heightening anxieties about a looming global recession.
This financial turbulence was not limited to the U.S. alone. A chain reaction trickled through global markets, with European indices like Germany’s DAX and France’s CAC 40 dropping significantly, and Japan’s Nikkei also witnessing declines. Companies on the home front felt the pressure too. For instance, GE Healthcare saw a sharp fall of 16%, DuPont down by 12.7%, and Nintendo faced delays in Switch 2 preorders. Automakers, already squeezed by tariff dilemmas, halted production, with Stellantis stopping operations in North America and Nissan re-evaluating U.S. manufacturing plans.
Economic Ramifications and Political Reactions
The cascading effects didn’t stop at the stock markets; commodity prices were hit as well, with oil sinking to its lowest since 2021 and copper seeing a sharp decline amid fears of a potential recession. Amid this financial storm, Federal Reserve Chair Jerome Powell remained cautious, warning that these tariffs could lead to 'higher inflation and lower growth.’ Despite mounting calls for immediate rate cuts, Powell held the line, resisting pressure from Trump, who publicly urged for financial relief measures.
Trump, however, downplayed the market chaos, calling it a 'necessary operation' to address trade imbalances. He appeared unfazed by both the financial loss and the bipartisan criticism aimed at his administration. While urging his supporters to 'get rich' amidst the upheaval, he hinted at new trade negotiations with Vietnam. Yet, prominent lawmakers, including Senators Amy Klobuchar and Ted Cruz, voiced significant concerns, highlighting the economic risks posed by this aggressive trade strategy.
According to economic experts, the situation is precarious, with analysts from JP Morgan putting the odds of a global recession at 60%. Barclays also issued a bleak forecast, warning that U.S. inflation could soar above 4%, with GDP potentially contracting in the last quarter. Amidst these predictions, the historic $5 trillion loss isn’t just an isolated U.S. issue—it's part of a broader $9 trillion wipeout in global markets since Trump's term began in January 2025. With markets teetering on the edge, investors are preparing for sustained trade tensions and keeping a close eye on potential interventions from the Fed.