The stock market plunged for a second day on Friday as China retaliated against new tariffs announced by President Donald Trump. The S&P 500 dropped nearly 6%, capping the worst week for US stocks since the Covid crash in 2020. Trump dismissed concerns about the market turmoil, urging his followers to “hang tough.” However, analysts warn the tariffs could lead to a contraction in trade and drive many countries into a recession.
China hit back with import taxes of 34% on US goods, curbed exports of key minerals, and added American firms to its blacklist. The EU trade commissioner said he had a “frank” exchange with US officials and that the EU is prepared to defend its interests. The sell-off started with firms relying on Asian suppliers but spread to sectors not directly impacted by tariffs.
Markets react to new tariffs
JP Morgan now puts the odds of a global recession this year at 60%. Some investors downplayed the losses, noting they follow a big run-up in US share prices.
Federal Reserve Chair Jerome Powell said the economy remains “solid” but acknowledged high uncertainty and warned growth would slow. Small businesses like Jacobson Appliance in New Jersey fear the changes could force them to shut down after 40 years. Housing-related firms rallied on hopes of lower mortgage rates.
In the Falkland Islands, fishing companies are wondering how new US taxes will impact their toothfish exports. As the rout continued, some White House allies even started to criticize Trump’s measures.
