The US stock market plunged into the red on Thursday as the White House elaborated on its plan for a substantial 145% tariff on China, escalating the ongoing trade war. The Dow Jones Industrial Average, after soaring nearly 3,000 points on Wednesday, experienced a volatile session and ultimately fell 1,015 points, or 2.5%. It had dropped as much as 2,100 points midday.
Stocks are in rally mode after the President said he doesn't intend to remove the Fed Chair. He also anticipates substantially lower tariffs on China. @KristenScholer explains in the Market Update. pic.twitter.com/6H4melw0Nt
— NYSE 🏛 (@NYSE) April 23, 2025
The S&P 500 declined by 3.46%, while the Nasdaq Composite slid 4.31%.
President Trump acknowledged potential transition issues during a press briefing, stating, “There will always be transition difficulty, but in history, it was the biggest day in history, the markets. We’re very happy with the way the country is running.
We’re trying to get the world to treat us fairly.”
#MarketAlert | Nifty gains 4.3% since Trump's April 2 tariff announcements
Who were the top gainers and losers in the index? Take a look👇 #Nifty #StockMarket #TrumpTariffs pic.twitter.com/YMMfOOAamc
— ET NOW (@ETNOWlive) April 24, 2025
The US dollar index, which tracks the dollar’s strength against six foreign currencies, fell by 1.7%, hitting its lowest level since early October. Gold prices surged to a record high of above $3,170 per troy ounce, reflecting investor concern and the yellow metal’s status as a safe haven during economic and geopolitical instability. Traders were initially uplifted by Trump’s decision to hold off on his so-called reciprocal tariffs for 90 days, which had imposed levies ranging from 11% to 50% on numerous countries.
The European Union also announced on Thursday its intention to negotiate a trade agreement with the United States following Trump’s U-turn. However, Trump’s administration maintains several tariffs, including a universal 10% tariff that took effect on Saturday, as well as 25% tariffs on auto imports, steel, aluminum, and certain goods from Canada and Mexico. Additional tariffs on pharmaceuticals, lumber, semiconductors, and copper are also being considered.
Stocks To Watch | 📊Ready, set, trade! Keep an eye on these stocks as they set the market abuzz #StockMarket #TrumpTarrifs pic.twitter.com/Js3aM4Fuq0
— ET NOW (@ETNOWlive) April 24, 2025
Economists predict that the economic damage from these tariffs is already significant, with a heightened risk of a recession in the US and globally.
Tariff escalation impact on stocks
Goldman Sachs indicated that the chances of a recession in the United States remain a coin flip after Trump’s partial detente, while JPMorgan retains its recession forecast at a 60% probability.
The CBOE Volatility Index, or Wall Street’s fear gauge, surged 40% on Thursday, and the VIX briefly traded above 50 points — a level indicative of extreme volatility. New data showed that inflation in the US slowed sharply in March, but the market’s focus remained on tariffs and future economic outlooks. China responded to Trump’s tariff escalation with its own punitive measures.
Goods from China to the United States are now subject to a tariff of at least 145%, with Beijing’s 84% retaliatory tariffs on US imports taking effect simultaneously. Although China expressed willingness to negotiate, it reiterated a stance of mutual respect and equality in dialogue. Billionaire investors expressed relief at Trump’s temporary tariff pause.
However, ongoing market stress is evident beyond just stocks. The bond market saw a slight cooling off, with the 10-year Treasury yield rising above 4.3% on Thursday. Oil prices remained pressured, with US oil falling below $60 a barrel, and global benchmark Brent crude declining by 4% to around $63 a barrel.
Global markets showed some recovery, with Japan’s Nikkei 225 index finishing more than 9% higher, and notable gains in South Korea, Hong Kong, Taiwan, and Australia. The stock market’s volatility underscores the economic tensions exacerbated by the U.S.-China trade war. While temporary measures offer brief relief, the uncertainties and existing tariffs continue to cast a shadow over financial stability and growth.
Photo by Kampus Production; Pexels