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A new wave of sweeping import tariffs announced by the U.S. President Donald Trump sent shockwaves through the financial markets on Thursday, erasing nearly $2 trillion from the S&P 500 Index in a single trading session. Investors reacted with panic as fears of a potential economic recession and supply chain disruptions gripped Wall Street.
Stock Market in Turmoil
The S&P 500 recorded its worst decline since 2022, dropping 4% during mid-day trading, while the Dow Jones Industrial Average tumbled 1,412 points (3.3%). The Nasdaq Composite, heavily weighted with tech stocks, suffered a staggering 5.1% decline. The futures market also reflected the chaos, with S&P 500 futures plunging 5%, Dow Jones futures down 2.8%, and Nasdaq futures falling 3.8%.
“This is broad-based panic selling,” said Garrett Melson, a strategist at Natixis Investment Managers Solutions. “Investors are de-risking, and there’s really nowhere to hide in absolute terms.”
Apple, Tech Stocks Lead the Sell-Off
Companies reliant on global supply chains bore the brunt of the market rout. Apple Inc., which manufactures the majority of its devices in China, saw its shares plummet 9.5%, wiping out nearly $275 billion in market value. Other consumer brands with overseas manufacturing ties, including Nike (-12%), Lululemon (-12%), and Target (-10%), also suffered steep losses.
The Philadelphia Semiconductor Index, which tracks major chipmakers, sank by 6%, with Nvidia (-5%), Broadcom (-7%), and Micron Technology (-11%) seeing major declines. Boeing (-6%) and Caterpillar (-6%), both heavily dependent on sales to China, also plunged.
Trump’s Tariffs Shake Global Markets
The market meltdown was triggered by Trump’s surprise tariff announcement late Wednesday, imposing a universal 10% import tax on all nations, with steeper levies on countries running trade surpluses with the U.S.:
- China: 34% tariff (raising total tariff exposure to 64%)
- European Union: 20% tariff
- Taiwan: 32% tariff
The aggressive trade measures, far exceeding those from Trump’s first term, are expected to disrupt global supply chains, worsen inflation, and potentially push the U.S. economy toward a recession.
“The scope and intensity of these tariffs are unprecedented,” said Michael Feroli, Chief Economist at JPMorgan. “This represents the largest tax increase since 1968, potentially adding 1.5% to inflation this year and hitting consumer spending hard.”
Europe and Asia Feel the Heat
While U.S. markets bore the biggest losses, global stocks also declined, though to a lesser extent.
- Asian markets fell 0.7%,
- European Stoxx 600 dropped 2.6%,
- The Euro strengthened 2.4% against the U.S. dollar as investors fled to safer assets.
Meanwhile, oil prices slumped more than 4%, and the U.S. dollar hit its lowest level against the Japanese yen since October.
With investors bracing for more volatility, all eyes are now on the Federal Reserve’s next move. The central bank, already grappling with inflation, may have to reassess its monetary policy if trade-related price hikes threaten economic stability.
“We’re in uncharted territory,” said Melson. “Markets are on edge, and until there’s clarity on trade policy, expect more turbulence.”
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