The White House Watch newsletter is being offered at no cost, providing insights into the implications of the 2024 US election for Washington and globally. Recently, Donald Trump defended his extensive tariff policy after these measures caused approximately $2.5 trillion in market value losses in Wall Street equities. The former US President expressed on Thursday evening that he had anticipated disruptions in financial markets as a consequence of his tariff plans, which aimed to elevate tariffs to their highest point in over a century. Trump described the economy as having underlying issues, likening it to “a sick patient.”
Despite his assurances that these tariffs would lead to “a booming economy,” the previous announcement of widespread 10% and higher tariffs on many countries had undermined investor confidence. Consequently, on Thursday, the S&P 500 experienced a 4.8% drop, erasing $2.48 trillion from the blue-chip index’s market value as determined by Financial Times calculations using FactSet data. The Nasdaq Composite, heavily laden with technology stocks, fell by 6%, marking its worst day since the onset of the 2020 coronavirus crisis. The US dollar also declined by 1.6% against a range of rivals.
Francesco Pesole, a currency strategist at ING, described the collapse as a general loss of confidence in dollar-denominated assets, stating it reflected “a vote of no confidence on 100 days of Trump.” As economists predicted that the imposed tariffs would fuel inflation and hinder growth, US bank stocks plummeted due to recession concerns, with the KBW index for the sector down 9.9%.
Over $300 billion was erased from Apple’s market capitalization, with shares in the world’s most valuable company dropping by 9.3% as investors prepared for the impact of Trump’s tariffs on the iPhone manufacturer’s Asian manufacturing bases. This was Apple’s worst market-capitalization fall on record. Meanwhile, Brent crude, the global oil market benchmark, dropped by 6.7% to $69.94 a barrel.
Robert Tipp, PGIM’s head of global bonds, commented that markets had been complacent but were now entering a recession-driven trading spiral. In response to market turmoil, investors sought the safety of US Treasury bonds, notably affecting shorter-dated bonds. These bonds experienced significant yield movements, the largest since August 2024, indicating investor expectations for further Federal Reserve rate cuts. Yields move inversely to prices, reflecting this sentiment.
Matthew Scott, head of core fixed-income and multi-asset trading at AllianceBernstein, noted a substantial shift toward Treasuries. These movements followed Trump’s Wednesday announcement of a 10% tariff on nearly all US imports starting April 5, along with “reciprocal” tariffs up to 50% on many countries beginning April 9. Tariffs on Chinese exports could exceed 60% due to an additional 34% duty on top of existing ones.
Analysts speculated that these measures might significantly reduce China’s GDP growth this year, prompting the world’s second-largest economy to pivot from manufacturing for export to boosting domestic consumption. In response, China’s commerce ministry vowed strong countermeasures to safeguard its interests, and the foreign ministry noted increasing opposition to the United States’ tariff hikes globally.
Trump has maintained that his tariffs will restore US manufacturing, stimulate investment, deter economic exploitation by other countries, and generate substantial revenue to fund tax cuts. Still, signs of stress are evident in the US market. Carmaker Stellantis announced plans to furlough 900 workers at five US plants due to separate 25% Trump-imposed tariffs on foreign car imports, which led to production suspensions in Canada and Mexico.
Consumer-focused companies, including sportswear giant Nike and electronics retailer Best Buy, are among those facing adverse impacts as concerns grow over the tariffs’ effect on consumer sentiment and supply chains. Traditional allies of Washington expressed dismay at what they consider an economically hostile move. French President Emmanuel Macron urged European companies to reconsider US investment in light of these developments.
UK Prime Minister Sir Keir Starmer, contrasting this stance, conveyed to business leaders on Thursday his intent to intensify efforts to secure a trade deal with the US following unsuccessful early negotiations that failed to prevent Trump from imposing a 10% tariff on all British exports. François Bayrou, French Prime Minister, categorized Trump’s tariff strategy as “a catastrophe for the world economy” and detrimental to both the US and American citizens.
This article was reported by Kate Duguid, Harriet Clarfelt, and George Steer in New York, Steff Chávez in Washington, and Ian Smith in London.
