Dow Drops 1,200 Points as China Retaliates Against Tariffs
The Dow Jones Industrial Average dropped more than 1,200 points, or about 3%, on Friday, April 4, 2025, following China’s retaliatory tariffs in response to President Donald Trump’s sweeping new trade measures. The broader S&P 500 and Nasdaq Composite also suffered significant losses, dropping 3.6% and 3.8%, respectively.
Escalating Trade War: Impact of Retaliatory Tariffs
The U.S.-China trade war escalated as China announced 34% tariffs on all U.S. goods, effective April 10, 2025. This follows a series of tariff hikes, including the U.S. raising tariffs to 54% on Chinese imports.
Analysts warned that this move could trigger a global recession. JPMorgan estimates a 60% chance of a U.S. and global recession this year. Concerns about other countries retaliating could worsen the economic downturn.
Markets Respond with Panic Selling
Investor panic led to massive sell-offs in U.S. stock markets, which saw major indexes suffering their worst performances in five years. Apple (AAPL) and Amazon (AMZN), both highly reliant on overseas manufacturing, were hit particularly hard. Apple’s stock dropped another 5%, building on a 9% plunge the day before. Meanwhile, Amazon’s stock tumbled 7%.
With stock markets plummeting, investors flocked to safer assets. Gold prices surged above $3,130 per ounce, and U.S. Treasury yields dropped below 4%, indicating growing concern over economic instability.
Global Market Turmoil and the Threat of Recession
The global impact of this trade war escalation was evident, with European and UK stocks falling by more than 3%, mirroring the steep losses in U.S. markets. The Russell 2000, which tracks smaller U.S. companies, officially entered bear market territory on Thursday.
The European Union and other U.S. trade partners have begun their own retaliatory actions. Canada announced retaliatory tariffs, specifically targeting U.S.-made cars, while France indicated that it might target individual U.S. companies, such as Tesla.
Meanwhile, Trump downplayed the market’s sharp decline, calling it “to be expected” and attributing it to a “transition period” in the economy. Despite the turmoil, he remains optimistic about trade negotiations, using the potential sale of TikTok as a bargaining chip in his tariff negotiations with China.
What’s Next for Global Markets?
As markets continue to react to the escalating trade war and fears of a global recession, much remains uncertain. Federal Reserve Chair Jerome Powell is scheduled to speak later today, and his comments may provide further insight into how the U.S. economy is navigating this volatile situation.
For now, the markets face ongoing uncertainty, with more tariffs likely on the way and a global economic slowdown looming large.
More…
- https://www.cnbc.com/2025/04/03/stock-market-today-live-updates.html
- https://edition.cnn.com/2025/04/04/investing/stock-market-dow-tariffs/index.html
- https://www.forbes.com/sites/dereksaul/2025/04/04/stocks-dive-even-further-on-tariffs-nasdaq-enters-bear-market-dows-2-day-loss-extends-to-2700-points
