The stock market plummeted on Friday, with the Dow Jones Industrial Average dropping more than 2,200 points. This steep decline came after China announced retaliatory tariffs on all US products, escalating trade war fears. The Dow fell 5.5%, entering correction territory, while the S&P 500 sank nearly 6%, marking its worst week since 2020.
The tech-heavy Nasdaq Composite dropped 5.8%, closing in bear market territory. China’s decision to impose tariffs on US goods, matching the additional 34% duties imposed by President Trump earlier in the week, heightened concerns about a prolonged global trade war. Investors rushed to government bonds, causing the yield on the 10-year Treasury to slide to 3.9%, near its lowest levels since October.
Economists warned about the impact of existing tariffs on the economy. Despite a stable labor market adding 228,000 jobs in March, the unemployment rate ticked up to 4.2%. This economic backdrop underscored worries about slower growth and higher inflation.
Dow drops amid China tariffs
President Trump added to market volatility with a defiant post on Truth Social, asserting that his policies “will never change” and accusing China of misplaying its hand. Stocks from all sectors suffered steep declines, with notable drops in components of the ‘Magnificent 7,’ such as Nvidia and Tesla.
Treasury Secretary Scott Bessent defended the administration’s actions, attributing the market downturn to factors beyond Trump’s economic policies, including the impact of Chinese startup DeepSeek’s AI developments on market valuations. The trade war jitters prompted a flight to safety, with Bitcoin holding steady above $84,000 even as stocks plunged. GameStop saw a notable 11% rise after CEO Ryan Cohen purchased 500,000 shares.
The escalating trade tensions also affected corporate pursuits, with several high-profile IPOs being delayed, including those from digital payments firm Klarna and fintech company Chime. Fed Chair Jerome Powell addressed the challenges posed by the tariffs, acknowledging they were “higher than anticipated.” He emphasized the importance of the Federal Reserve’s independence amidst calls for interest rate adjustments, explaining his choice of a purple tie to symbolize bipartisanship and a nonpolitical stance. As the market turmoil continued, investors awaited further clarity on how the administration’s trade policies and global economic conditions would evolve in the coming months.
The stock market’s sharp decline underscored the high stakes and uncertainties surrounding the US-China trade war, with market participants remaining on edge, awaiting the next moves from both Washington and Beijing.
