Happy Liberation Day! Today the United States President, Donald J. Trump, unfurled his tariffs which range from 10% and more to certain countries. This led the market to plummet, as investors had concerns about these tariffs. Despite the market going down, many people predicted this to happen as the tariff war escalates. Investors have fear of a global trade war and economic recession.
The Dow Jones Industrial Average plunged by over 1,200 points (approximately 3.1%), while the S&P 500 and Nasdaq Composite fell 4% and nearly 5%, respectively. This is statistically the worst day in the United States stock market since the COVID-19 outbreak in March of 2020. The retail stocks took a beating, with companies such as Nike, Tesla, and Nvidia having major losses. The Russell 2000 index, which is meant for more penny-based stocks, dropped a historically low 6%.
Let’s discuss how the international markets reacted to these policies. European indices such as Germany’s DAX and the STOXX 600 fell by over 2%, while Japan’s Nikkei and Hong Kong’s Hang Seng declined by nearly 3% and 1.5%, respectively. The reason for these drops are because of the tariff policies. All week before the policies these markets were up.
You might ask: “What are the details of Liberation Day?” It is a minimum 10% tariff on all imported goods, and some countries such as China (54%), India (26%) and the European Union (54%) are facing steeper tariffs. Some economists project that this might lead to recessions in other countries and higher consumer prices in the United States. President Trump’s reasoning for this is to tariff countries back for the tariffs they enabled to the United States when former President Joe Biden was in office. Overall the market was down today, and is projected to continue to drop when it opens Friday morning because of these new policies.
