The stock market plunged on Friday as China hit back against new tariffs from the US. The S&P 500 dropped nearly 6%, capping off the worst week for US stocks since the Covid crash in 2020. President Trump recently announced sweeping 10% import taxes on goods from every country.
Key trading partners like China face even higher rates. China retaliated on Friday with 34% tariffs on US goods, export cuts on key minerals, and blacklisting American firms. Trump dismissed concerns about the market turmoil.
“Hang tough,” he posted on social media. “We can’t lose.” But analysts expect the tariffs to shrink global trade and possibly trigger a recession. The EU trade commissioner said he had a “frank” talk with US officials.
“The EU is committed to meaningful negotiations but also prepared to defend our interests,” he stated. The stock sell-off began with companies like Apple and Nike that rely on Asian suppliers. But it spread to sectors like consumer staples, healthcare, and utilities.
Markets plunge as tariffs escalate
JP Morgan now sees a 60% chance of a global recession this year, up from 40% before. Some investors downplayed the losses after years of stock gains.
But Federal Reserve Chair Jerome Powell warned the tariffs could slow growth and raise prices. In New Jersey, small business owner Pat Muscaritolo said the tariffs may force him to close his 40-year-old appliance shop. Housing-related stocks were a bright spot as investors bet on lower mortgage rates boosting home sales.
Nike and other apparel retailers also recovered some losses on hopes of a deal with Vietnam. But Apple fell over 7%, and oil prices sank. Even some White House allies began to criticize the tariffs.
Republican Senator Ted Cruz warned of “enormous risks” from escalating trade barriers. Businesses worldwide, from the Falkland Islands to the UK, faced new export taxes and uncertainty. As the rout deepened, the Dow Jones and Nasdaq dropped over 5%, France’s CAC 40 fell 4.3%, and Japan’s Nikkei lost 2.7%.
The global economy braced for more trade war fallout ahead.
