The stock market fell significantly Thursday after President Donald Trump‘s “Liberation Day” tariffs announcement.
Trump announced the most recent round of tariffs, which slapped over 180 countries with a 10% tariff and 57 with additional tariffs, after markets closed at 4 p.m. Wednesday, meaning the main effect of the announcement in the United States only occurred after markets opened at 9:30 a.m. Thursday. However, the announcement already affected futures, which, for the S&P 500, declined 3.4% before the market opened, for the Dow Jones Industrial Average by 2.8%, and for the Nasdaq by 3.8%.
As of 11 a.m., the Dow was down 1,550 points, the S&P 500 by 4.32%, and the Nasdaq by 5.56% after opening. By noon, there was some rebounding, with the Dow recovering 400 points and the S&P 500 and Nasdaq down 3.5% and 4.6%, respectively.
Big U.S. stocks tumbled. Nike fell 12%, Apple fell 7.95%, and Amazon fell 6.83%.
Global markets were sent reeling. Japan’s benchmark Nikkei 225 index fell over 4% after the open, South Korea’s Kospi index fell 2.7%, Europe’s benchmark Stoxx 600 fell 1.2%, Germany’s DAX index fell 1.3%, France’s CAC index fell 1.6%, and London’s FTSE 100 index fell 1%.
Sony fell 5.4% in the morning, Toyota fell 5%, Honda fell 4%, Samsung fell 3%, and Hyundai fell 3%.
The dollar faced significant pressure as traders began losing confidence in the world’s primary reserve currency. The dollar index, measuring the U.S. dollar against six others, fell 1.78% to its lowest point since early October at $101.65. The euro, Japanese yen, and British pound all rose significantly. The euro made out the best, gaining 1.5% to a six-month high of $1.1021.
Deutsche Bank Research said the “dramatic nature” of the moves left it “increasingly concerned that the dollar is at risk of a broader confidence crisis,” Seeking Alpha reported.
“The safe haven properties of the dollar are being eroded, and this is imposing a significant cost on unhedged dollar holdings. Beyond that, developments since the start of the year make us worried about a broader undermining of confidence in the U.S. economic outlook and the medium-term desirability of dollar allocations,” the bank said.
After rising to an all-time high, the price of gold retreated 1.4% to $3,090. U.S. gold futures sank 1.7% to $3,111.40. Spot silver fell 4.7% to $32.44, platinum declined 2.6% to $957.60, and palladium declined 1.6% to $954.78.
Despite the dip, Adrian Ash, director of research at BullionVault, said the long-term prospects for gold are still at a record high, according to Reuters.
“Weaker trade, higher input costs, and shrinking margins are badly hurting the stock market while geopolitical mistrust is deepening,” he said.
“Such a gloomy outlook for economic growth offers the perfect backdrop for further gains in gold,” Ash added.
Cryptocurrency also faced a significant drop. Crypto exchange Coinbase Global fell roughly 4%, and bitcoin holder Strategy dropped 3%.
Sal Guatieri and Jennifer Lee, senior economists with BMO Capital Markets Economics, said the fall is the result of fears of an escalating trade war.
“Most commodity prices are lower, even gold, on concern that this major escalation of the trade war will harm not just the global economy but the U.S. as well,” they said, according to WFMZ.
Trump announced “Liberation Day” in a Rose Garden speech attended by autoworkers, Cabinet members, and members of Congress. In his remarks, while holding a chart showing different tariff rates, he accused foreign countries of taking advantage of the U.S. through unfair trade policies. He said April 2 marked the U.S.’s “declaration of economic independence.”
“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump said, pointing to the loss of U.S. factories and the outsourcing manufacturing jobs.
“With today’s action, we are finally going to be able to make America great again — greater than ever before,” he added. “Jobs in factories will come roaring back into our country.”
Every country was slapped with a 10% base tariff, with additional “reciprocal” tariffs slapped on others. China was hit with a 34% tariff in addition to a previous 20% tariff, bringing its total to 54%. Cambodia (49%), Laos (48%), and Vietnam (46%) were among the hardest hit with “discounted” reciprocal tariffs. The United Kingdom and Australia were among the countries hit with the minimum 10% tariff. Israel wasn’t spared from a higher tariff rate, being hit with a 17% tariff.
