US markets suffered their worst day since 2020, as President Donald Trump's sweeping <a href="https://www.thenationalnews.com/news/us/2025/04/02/donald-trump-global-tariffs/" target="_blank">tariffs</a> spooked investors of a <a href="https://www.thenationalnews.com/business/markets/2025/03/05/global-stocks-face-uncertainty-amid-trump-trade-war/" target="_blank">global trade war</a> and a weakening American economy. Mr Trump had announced a baseline 10 per cent tariff on all imports during a White House ceremony on Wednesday. He also announced so-called reciprocal tariffs on dozens of others, including China, the EU, the UK, the <a href="https://www.thenationalnews.com/business/economy/2025/04/03/trump-tariffs-uae-saudi-arabia/" target="_blank">UAE and Saudi Arabia</a>. “Trump’s tariff announcement was worse than expected,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. The Dow Jones Industrial Average tumbled 1,679 points – or 3.98 per cent – when trading closed. The S&P 500 and Nasdaq Composite fell 4.84 and 5.97 per cent, respectively, in what was their worst performance since the onset of the Covid-19 pandemic. “Companies that make up the S&P 500 generate about 40 per cent of their revenue outside of the United States. This leaves Wall Street exposed to potential trade wars that hamper the free flow of goods and services,” said Zain Vawda, market analyst at Oanda. The small-cap Russell 2000 entered bear market territory after dropping 6.56 per cent. <a href="https://www.thenationalnews.com/business/energy/2025/03/21/oil-prices-iran/" target="_blank">Brent</a>, the benchmark for two thirds of the world’s oil, was down 6.7 per cent at $69.93 a barrel. West Texas Intermediate, the gauge that tracks US crude, was 7.01 per cent lower at $66.68 a barrel. Asian stocks also fell sharply, with Japan's Nikkei 225 index plunging by about 4.6 per cent in early trading to hit its lowest in about eight months, before recovering slightly later in the day. The 24 per cent tariff on Japanese goods was much higher than expected. Meanwhile, South Korea's benchmark Kospi index was also down about 1.08 per cent, Hong Kong’s Hang Seng index was 1.64 per cent lower, and the Shanghai Composite index was 0.36 per cent lower at 7.25am UAE time. Europe's STOXX 600 index fell 2.7 per cent. Leaders in China, the EU and Canada all vowed to impose retaliatory measures against the US in response to Mr Trump's tariffs. Mexican President Claudia Sheinbaum was expected to announce her country's response to the latest duties later on Thursday. "I think it's going very well," Mr Trump said when asked about the response to tariffs. China and Vietnam were the targets of some of the harshest tariffs, at 34 per cent and 46 per cent. India will be hit with a 26 per cent tariff while the EU will receive a 20 per cent levy. “Traders will likely brake themselves for another few weeks, if not months, of major swings given the severity of the US package and the time consuming nature of negotiations,” said Christian Gattiker, head of research at Julius Baer. “Although it is unlikely to be the classical ‘sell the rumour, buy the fact’ set-up, there may be some short-term bounce in the cards.” Peter Andersen, founder of Andersen Capital Management in Boston, believes markets will be able to absorb the long-term impact of the tariffs. "I'm waiting to see if this will trigger real negotiations with countries impacted by the tariffs," he said. "If that were to start happening – that would be a short-term rally – I think the market would snap back." Trump officials spent part of Thursday rushing to defend the President's orders. "We are a couple hours in," Agriculture Secretary Brooke Rollins said. "The President announced this yesterday afternoon. We knew that there would be some of that, as people are adjusting, but at the end of the day, yesterday marks step one." Economists largely agree that Mr Trump's tariffs will raise inflation and weaken economic growth in the US, which will likely lead to lower global growth. One analysis from Oxford Economics expects the uncertainty surrounding trade policy could result in global growth below 2 per cent. "This would still be some way off the technical definition of a global recession – for this to happen, GDP [gross domestic product] growth would need to fall below the rate of world population growth, which is currently about 0.9 per cent in annual terms," wrote Ben May, director of global macro research at Oxford Economics. "Nonetheless, it would be the weakest annual growth rate since the global financial crisis, excluding the pandemic period."
