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By Taylor Herzlich, James Franey and Ariel Zilber,
President Trump’s “Liberation Day” has been followed by a “day of reckoning” on Wall Street.
Stocks cratered Thursday — a day after Trump unveiled a historic batch of reciprocal tariffs that could fuel an all-out trade war — wiping out about $3.1 trillion in market value.
The Dow Jones Industrial Average plunged 1,679, or 4%, to end its worst session since the COVID pandemic hit the country in 2020.
The S&P 500 plummeted 4.84% and the Nasdaq nosedived nearly 6% after Trump revealed at least 10% tariffs on all imports, and much harsher rates on dozens of countries after the markets closed on Wednesday.
David Doyle, head of economics at Macquarie Group, said it was “the biggest trade shock in US history.”
“The tariffs increase the risk of stagflation,” Doyle told The Post. “They are likely to result in stronger core inflation and weaker growth with the odds of a potential US recession increasing.”
Investors fear a full-blown trade dispute could trigger a sharp global economic slowdown and drive up inflation, with the latest round of US trade tariffs hitting a world economy barely recovered from the post-pandemic inflation surge and dealing with geopolitical strife.
During an appearance on Fox News’ “Fox & Friends” Thursday morning, Vice President JD Vance said he isn’t going to “shy away” from the short-term pain the tariffs could cause Americans, but insisted the US needed a “big change.”
Companies with China-reliant supply chains saw significant losses.
Shares in Apple — which produces the majority of its iPhones in China — plunged 9.25% after Trump hit Beijing with a stiff 34% rate, which brings the total to 54% when including earlier tariffs this year.
The other members of the so-called Magnificent 7 — Nvidia, Tesla, Microsoft, Amazon, Alphabet and Meta — suffered a combined $1 trillion in losses.
“This was the worst-case scenario for tariffs and were not priced into the markets, which is why we are seeing such a risk-off reaction,” Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, said in a note.
“We’re expecting rocky markets for the next few months, and through the end of the first half of the year,” she added.
Sneaker companies like Nike, Adidas and Puma — many of which lean on Vietnam for production capacity — also tumbled Thursday morning. Nike suffered the largest loss, with its shares falling 14.44%.
The U.S. dollar also weakened sharply. The euro hit a six-month high against the dollar and was last up 1.74% at $1.1037, while the dollar fell 1.95% against the Japanese yen to 146.445 yen, and sank 2.35% on the Swiss franc to 0.8608 franc.
Citi was quick to recommend a long position in the euro, while its strategists forecast the US dollar sinking to its weakest level since October 2021.
Trump’s sweeping tariffs explained
- A new 10% baseline rate and harsher “reciprocal” levies will impact dozens of countries, including key allies such as European Union members, Japan and Israel.
- Online Chinese retailers, such as Temu and Shein, are no longer exempt from tariffs, due to the closing of a trade loophole on de minimus goods.
- A 25% tariff has been issued on foreign-made cars, which impacts roughly half of all vehicles sold in America.
- Following Trump’s “Liberation Day,” the Dow plunged more than 1,000 points over fears of an all-out trade war.
The 10% baseline is approximately triple what the average US tariff rate was before Trump took office in January, and will take effect at 12:01 a.m. Saturday.
Specific reciprocal tariffs above the 10% rate will take effect after midnight on April 9, leaving wiggle room for some nations to negotiate with the US.
But that uncertainty over how tariff talks will play out could continue to spell trouble for the stock market.
“While we have made it past Liberation Day, there is still no clarity on tariffs, as President Trump has complete discretion on adjusting these tariffs and the ability to create carve-outs as he sees fit,” David Bahnsen, chief investment officer at the Bahnsen Group, said in a note.
“For a stock market that was craving certainty, there is now even more ambiguity than before this announcement.”
The tariffs also left America’s friends and foes wondering whether there would be an all-out trade war.
French President Emmanuel Macron called on Europe’s biggest corporations to slam the brakes on any US expansion plans in what appeared to be the EU’s opening salvo in the transatlantic spat.
“What would be the message of having major European players investing billions of euros in the American economy at a time when they’re hitting us?” Macron said.
Many Americans snap up key, cheaper goods from China, where foreign ministry spokesperson Guo Jiakun lashed out at what Beijing sees as “bullying.”
But Trump’s trade envoy Jamieson Greer hit back, claiming globalization has “allowed countries to use unfair trade practices to get ahead at the expense of hardworking Americans.”
“President Trump is revolutionizing our trade policy to put the American economy, the American worker, and our national security first,” he added.
Justin Onuekwusi, chief investment officer at St James’s Place, urged governments around the world to think twice before embarking upon a tit-for-tat trade war with the United States.
“Significant retaliation could lead to a tariff ‘spiral of doom’ that could be the growth shock that drags us into recession,” he said.
Source: https://nypost.com
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