US stocks tumbled on Thursday as the White House clarified its plan for a massive 145% tariff on China. The Dow dropped 1,015 points, or 2.5%, while the S&P 500 fell 3.46% and the Nasdaq Composite slid 4.31%. The downturn came after a significant recovery the previous day.
Despite President Donald Trump pausing most of his “reciprocal” tariffs, significant damage had already been inflicted by other massive import taxes. The US dollar index tumbled 1.7% Thursday, hitting its lowest level since early October. Gold prices hit a fresh record high above $3,170 a troy ounce.
Investors were initially relieved that Trump temporarily rescinded his so-called reciprocal tariffs for 90 days. Stock futures responded positively to the European Union’s announcement to negotiate a trade agreement after Trump’s U-turn. Despite the pause on certain tariffs, many economists say the economic damage is already done.
The stock market remains significantly below where it was before Trump unveiled his “Liberation Day” tariffs.
Stocks drop as tariffs clarified
Goldman Sachs and JPMorgan both indicated that they still foresee a considerable chance of a US and global recession.
“All this does is postpone temporarily what will likely be a series of punitive import taxes put on US trade allies,” said Joe Brusuelas, chief economist at RSM. The CBOE Volatility Index surged 40% Thursday, trading above 50 points at one point. New data showed inflation in the US slowed sharply in March, but attention remains focused on tariffs and the economic outlook.
China responded with retaliatory tariffs of 84% on US imports. Beijing expressed willingness to negotiate but insisted it would not back down if Trump escalated the trade war further. Amid the turmoil, some billionaire investors, such as Ray Dalio, applauded Trump’s decision to step back temporarily.
“There are better and worse ways of handling our problems with unsustainable debt and imbalances, and President Trump’s decision to step back from a worse way and negotiate is a much better way,” Dalio said. Bond markets showed signs of stress, with the 10-year Treasury yield above 4.3% on Thursday. Oil prices also fell, with US oil dropping below $60 a barrel and Brent crude falling 4% to around $63 a barrel.
The situation remains in flux as the impact of Trump’s tariffs continues to ripple through global markets.
