The US stock market plunged into the red on Thursday as the White House clarified its plan for a massive 145% tariff on China, escalating a trade war. The Dow Jones Industrial Average fell 1,015 points, or 2.5%, after tumbling as much as 2,100 points midday. The S&P 500 fell 3.46% and the Nasdaq Composite slid 4.31%.
President Donald Trump acknowledged some “transition problems” could be expected. “A big day yesterday. There will always be transition difficulty — but in history, it was the biggest day in history, the markets.
So we’re very, very happy with the way the country is running. We’re trying to get the world to treat us fairly,” Trump said. The US dollar index tumbled 1.7% Thursday, hitting its lowest level since early October.
Gold prices hit a fresh record high above $3,170 a troy ounce on Thursday, as the yellow metal is considered a safe haven amid economic and geopolitical turmoil. Traders initially reacted positively to Trump’s temporary rescindment of his so-called reciprocal tariffs for 90 days. However, economists said the economic damage is done, and many say there is still an elevated risk of a US and global recession.
Trump’s universal 10% tariff that went into effect Saturday remains in place, as do 25% tariffs on auto imports, steel, aluminum, and some goods from Canada and Mexico. Goldman Sachs said Wednesday after Trump’s partial detente that recession chances in the United States were still a coin flip. JPMorgan said the bank would not alter its recession forecasts, still seeing a 60% chance of a US and global recession even after Trump’s decision to unwind his country-specific tariffs.
The CBOE Volatility Index, or Wall Street’s fear gauge, surged 40% Thursday.
Us stocks tumble with trade tension
The VIX briefly traded above 50 points midday — a rare level associated with extreme volatility.
New data on Thursday showed that inflation in the US slowed sharply in March. Skyler Weinand, chief investment officer at Regan Capital, indicated that current economic data is backward-looking and doesn’t account for the recent tariffs’ impact on consumer prices. Meanwhile, Trump isn’t backing off his alarming trade war with China.
Goods coming from China to the United States are now subject to at least a 145% tariff, the White House clarified Thursday. Also on Thursday, Beijing’s retaliatory 84% tariffs on US imports to China went into effect. China says it remains willing to negotiate with the United States, but a spokesperson for the Chinese Commerce Ministry reiterated Thursday that China will not back down if Trump chooses to further escalate the trade war.
Some billionaire investors, who have been pressuring Trump to back off his punishing tariffs, welcomed the president’s decision to pause the tariffs. However, signs of stress remain in markets beyond just stocks. Oil prices also remained under pressure.
US oil fell again Thursday to below $60 a barrel, near where oil was in April 2021. Brent crude, the global benchmark, also fell 4% to around $63 a barrel. Global markets, however, showed signs of recovery on Thursday.
Japan’s benchmark Nikkei 225 index finished more than 9% higher, while South Korea’s Kospi index was up 6.6%. Hong Kong’s Hang Seng index jumped 2.1%, and Taiwan’s Taiex rose 9.3%. In Australia, the ASX 200 closed up 4.5%.
European stocks also surged following clarifications from the European Commission.
