Stock markets tanked losing $5 trillion in value, the American dollar suffered its biggest one day drop in two-and-a-half years, and oil prices fell as tariffs ignited worries of a global recession but President Donald Trump insists that he did nothing wrong and vowed to maintain his disastrous tariff policies.
The current revival of tariffs might be called the Smoot-Hawley-imitation-Trump, but we have yet to see if this nomenclature’s apt acronym for the debacle will be widespread.
The Dow Jones Industrial Average closed at 38,314.86 Friday, surrendering every point gained since Trump began his second term as a deepening trade crisis rattled global markets. The Dow plunged by 2,231 points, after Thursday’s loss of 1700 points.
The S&P 500 has now fallen more than 13 percent this year, sinking deep into correction territory, while the Nasdaq entered bear market status with a 20 percent plunge from its recent peak.
Oil prices also plunged this week as a result of sweeping U.S. tariffs and the unexpected agreement by eight OPEC+ countries to increase output by 411,000 barrels per day in May, erased $10 per barrel from global benchmarks.
The dollar on Thursday fell about 1.7% in its biggest daily drop since November 2022, opens new tab, after President Donald Trump imposed tariffs on imports at levels not seen since the early 1900s. Left unchecked, a crisis of confidence in the dollar could also undermine its position as the world’s reserve currency, they added.
Thursday’s 1,700-point market crash was followed by another steep decline Friday after China imposed retaliatory tariffs matching the 34 percent rate Trump levied on Chinese imports earlier this week.
Beijing’s swift countermeasures signaled the start of a full-scale trade war, with Chinese officials condemning U.S. “unilateral bullying” while unveiling export controls on rare earth minerals and targeting American firms with antitrust probes.
The tit-for-tat escalation sent the Dow down another 5.5 percent, the S&P 500 tumbling nearly 6 percent, and the Nasdaq sliding 5.8 percent by closing bell.
J.P. Morgan analysts now estimate a 60 percent chance of recession, warning the economic contraction could push unemployment to 5.3 percent. Federal Reserve Chair Jerome Powell acknowledged the tariffs will likely slow growth and accelerate inflation, complicating the central bank’s ability to cut interest rates.
The volatility index spiked 45 percent in a single day as investors fled to bonds, with the 10-year Treasury yield dropping sharply. Oil prices cratered 6 percent to $62 per barrel on fears of shrinking global demand.
Smaller companies bore the brunt of the selloff, with the Russell 2000 index plunging over 18 percent this year as firms lacking economies of scale struggle to absorb tariff costs. Tech giants tied to global supply chains suffered steep losses, including Nvidia (-7%), Apple (-7%), and Tesla (-10%). The rapid market deterioration reflects growing alarm over Trump’s sweeping 10 percent baseline tariff on most imports, plus higher targeted rates for nearly 60 trading partners – policies economists warn could cost the average American household $2,400 annually.
Chinese experts vowed continued retaliation, with Renmin University’s Wang Yiwei comparing Trump’s tactics to “blackmail” that Beijing would resist. While some allies like Singapore await negotiations, Japan’s prime minister declared the tariffs a “national crisis,” ordering emergency economic measures.
The White House has shown no signs of retreat, with one official stating the president “doesn’t give a fuck” about market reactions or foreign backlash.
The S&P 500 dropped more than 10 percent in two days and the tech-heavy Nasdaq Composite Index closed in a bear market on Friday, capping one of Wall Street’s worst weeks since the start of the coronavirus pandemic in 2020.
The U.S. rout followed losses in global markets. Worries about an escalating global trade war set off by President Trump overshadowed a positive reading on Friday about the health of the American labor market.
As the world’s two largest economies dig in for prolonged conflict, analysts warn the worst may be yet to come, with potential for reciprocal tariff hikes to 67 percent if the standoff continues.
For American workers and consumers already facing rising prices and economic uncertainty, the path forward appears increasingly perilous.
What began as a policy announcement Wednesday has spiraled into the most severe trade confrontation in decades, with global markets signaling their verdict through billions in vanished wealth. The question now is not whether the trade war will inflict pain, but how deep the wounds will cut – and how long before either side blinks.
Discover more from NJTODAY.NET
Subscribe to get the latest posts sent to your email.