Stock Markets Slide After Trump Unveils Tariffs

Shockwaves reverberated through Wall Street on Thursday after President Trump announced higher-than-expected tariffs for most of America’s trading partners, upending economic forecasts and sending stock markets sharply lower.

The S&P 500 plunged more than 4 percent on Thursday, after Asian and European stock markets also fell steeply. Measures of inflation expectations soared higher, intensifying fears of an economic slowdown and sending the dollar lower as investors rushed to the safety of government debt.

The slide came after Mr. Trump announced on Wednesday a new 10 percent base line tariff on all imports as well as additional, country-specific taxes on goods from a host of other countries. Those included increasing total tariffs on Chinese imports to 54 percent, as well as 20 percent on goods coming from the European Union and 24 percent on Japanese imports.

The market reaction suggested that the scale of the tariffs on Wednesday had come as a surprise, and there was confusion about how the figures had been derived.

“The numbers are shockingly high compared to what people were expecting and it is inexplicable in many ways,” said Peter Tchir, head of macro strategy at Academy Securities. “I think it’s a disaster.”

The Trump administration had modified its estimates of the tariffs imposed on the United States to include adjustments for what it deemed currency manipulation or even other taxes, with analysts questioning the analytical basis for doing so.

“Trump is going to war with countries on this,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “It’s ridiculous. It shows no comprehension as to what he is doing to other countries. And it is going to hurt the U.S.”

The value of the U.S. dollar against a basket of other major currencies dropped more than 2 percent, its worst day since late 2022.

Many major U.S. companies sank as trading began. Some of the worst hit were technology stocks: Shares in Apple were down more than 8 percent, Amazon fell 8 percent and shares in Nvidia dropped roughly 5 percent. The tech-heavy Nasdaq Composite index fell more than 5 percent.

Shares in consumer brands also slumped as the Trump administration imposed steep tariffs on countries that are manufacturing hubs for shoes and clothing, for example a 46 percent tariff on Vietnam and 32 percent on Indonesia. Nike’s shares dropped 12 percent.

The Russell 2000 index of smaller companies more exposed to the health of the economy fell nearly 6 percent. The index dropped into a so-called bear market, defined as a drop of 20 percent or more from a recent peak. The Russell is now 21 percent below its November peak.

In Europe, shares of Puma and Adidas tumbled alongside the stock of Pandora, a Danish jewelry company that makes its products in Thailand, which fell 10 percent.

The Stoxx Europe 600 fell more than 2 percent on Thursday, with most sectors, including banks, technology and consumer goods, in the red. Shares in Maersk, the Danish shipping giant, fell on fears of a global trade slowdown, while big European banks including HSBC, Commerzbank and Deutsche Bank, also slumped.

In Asia, the stocks tumbled for a wide range of companies including technology and semiconductor giants, as well as major auto exporters. Shares of Japanese automaker Toyota fell more than 5 percent on Thursday, while South Korea’s Samsung Electronics fell close to 3 percent.

Investors flocked to government debt as a haven. The yield on the 10-year U.S. Treasury bond, which moves inversely to prices, fell to 4.01 percent, its lowest since October. Mr. Trump has honed in on the 10-year yield as a measure of his success in lowering interest rates but analysts warn that the recent drop reflected mounting worries for the economy.

The prospect of weaker global economic growth also weighed on commodities. Oil prices slumped even further after the OPEC oil cartel and its allies accelerated plans to increase supply. Brent crude oil, the international benchmark, dropped more than 6 percent to around $70.20 a barrel.

Stock markets globally have been choppy in recent weeks, as investors have been whipsawed by the administration’s mixed messages on tariffs. Mr. Trump has previously announced, delayed, changed and ultimately imposed tariffs on Canada, Mexico, steel, aluminum, cars and auto parts.

The uncertainty around the tariff levels, and how long they might last, has made it difficult for investors, economists and policymakers to assess the potential ramifications for consumers, businesses and the broader economy.

The U.S. tariff rate on all imports is now around 22 percent, from 2.5 percent in 2024, said Olu Sonola, the head of U.S. economic research at Fitch Ratings. That rate was last seen around 1910, he said.

With Thursday’s drop, the S&P 500 is back in correction, defined as a drop of 10 percent or more from its recent peak and a line in the sand for investors assessing the severity of a recent drop. The index is now over 11 percent below its peak reached in February. The Nasdaq Composite index has fallen over 17 percent since its peak in December.

Signs of worry have also been evident in the rapid rise in the price of gold, rising alongside inflation worries. Investors have flocked to the precious metal, sending it 19 percent higher in the first three months of the year, its biggest quarterly rise since 1986. On Thursday, gold was trading at over $3,100 per troy ounce, while a market measure of inflation expectations one year from now shot up to 3.5 percent.

Although many investors worry about the inflationary effect of tariffs, falling bond yields and a declining U.S. dollar suggest that most are more worried about waning economic growth.

It has led investors to suggest that the Federal Reserve might need to cut interest rates more aggressively. Traders had been betting on three more quarter-point cuts this year, but the chances of a fourth have now increased, financial markets implied.

Some investors had hoped that the tariff announcement on Wednesday would cure some of the uncertainty in the financial markets. But few truly expected the news to be the end of Mr. Trump’s tariff talk and with it an end to the stock market volatility.

“Investors no longer see tariffs as a one-time event risk, but an always-present risk,” said Mandy Xu, head of derivatives market intelligence at Cboe Global Markets, adding that the current expectation in the market is for volatility to persist.