Global Markets Plunge Following President Trump's Sweeping Tariff Announcement

Markets worldwide plunged on Thursday after President Trump announced comprehensive tariffs against America’s major trading partners, including the European Union and Japan.

Futures tied to the S&P 500, which let investors trade the index outside regular trading periods, dropped by over 3%. Asian and European stock markets saw sharp declines, with Japan’s benchmark indexes falling over 3%, and markets in Hong Kong, South Korea, Germany, and France nearly 2% lower. The U.S. dollar’s value fell more than 1% against a basket of other major currencies.

The downturn followed Trump’s Wednesday speech at a White House ceremony, unveiling a new 10% baseline tariff on all imports, along with specific duties for several countries. Noteworthy were an additional 34% on Chinese imports, compounding a recent 20% tariff on China, and 20% on goods from the EU, plus 24% on Japanese imports.

The magnitude of the tariffs seemed to catch markets off guard, creating uncertainty over the basis for the calculations.

“These figures exceed expectations significantly and are inexplicable in several respects,” said Peter Tchir, head of macro strategy at Academy Securities. “I view it as a disaster.”

The Trump administration adjusted its tariff projections, factoring in perceived currency manipulations and other tax considerations, raising doubts about the analytical framework.

“Trump is waging a trade war,” asserted Andrew Brenner, head of international fixed income at National Alliance Securities. “It’s absurd and reveals a lack of understanding of the global impact. It will damage the U.S.”

Investors turned to government bonds as a safeguard, with the 10-year U.S. Treasury yield falling to 4.08%, its lowest since October—yields move inversely to bond prices. Concerns over diminished global economic growth also pressured commodities, with Brent crude oil, the global benchmark, declining 4% to around $71.90 per barrel.

The Stoxx Europe 600 dropped 1.7% on Thursday, affecting most sectors, including banking, technology, and consumer goods.

Consumer brand stocks took a hit as the U.S. imposed tariffs on key manufacturing countries for apparel, such as a 46% tariff on Vietnam and 32% on Indonesia. Adidas and Puma shares fell about 9% each in Frankfurt, while Danish jewelry company Pandora, manufacturing its products in Thailand, saw a 12% drop. Nike’s shares dropped over 8% in premarket trading in New York.

Maersk, a Danish shipping heavyweight, experienced a 7% decline amid fears of a global trade slowdown. Major European banks like HSBC, Commerzbank, and Deutsche Bank saw their shares drop over 4%.

Global stock markets have encountered turbulence recently, with erratic signals from the Trump administration regarding tariffs. In the past, Trump has announced, postponed, altered, and ultimately applied tariffs on various goods including those from Canada and Mexico, as well as on steel, aluminum, cars, and auto parts.

Japan’s Nikkei 225 dipped into correction territory on Monday and experienced further shocks on Thursday. Analysts and trade specialists in Tokyo were unprepared for Trump’s announcement of a 24% levy on Japanese products. Previously, some business leaders there were hopeful that Japan’s typically low average tariff rate might shield them from steep tariffs.

The ambiguity around tariff levels and their duration has complicated assessments of potential effects on consumers, businesses, and the broader economy for investors, economists, and policymakers.

U.S. tariffs have surged to around 22%, up from 2.5% in 2024, according to Olu Sonola, head of U.S. economic research at Fitch Ratings—the highest level since 1910.

As of Wednesday, the S&P 500 has dropped 7.7% from its recent peak in February. The tech-heavy Nasdaq Composite has fallen nearly 13% since its December peak. Tech stocks were among the biggest premarket losers, with Apple’s shares down more than 6%, Amazon nearly 5%, and Nvidia and Palantir about 3% each.

In Asia, a broad spectrum of stocks, from tech to major auto exporters, took a hit. Shares of Japanese automaker Toyota fell over 5%, while South Korea’s Samsung Electronics lost nearly 3%.

Investor jitters have also driven gold prices up sharply, rising 19% in the first quarter—the steepest surge since 1986—and trading over $3,100 per ounce on Thursday.

While tariff-induced inflation is a concern, declining bond yields and a weakening dollar suggest more worry over sluggish economic growth.

The dollar slipped as Trump spoke in the Rose Garden. Thursday saw the dollar index, tracking the currency against others, drop by 1.1%, marking its worst day in over a month.

Some investors had hoped Wednesday’s tariff announcement might mitigate market uncertainties, yet few anticipated it signaled the end of Trump’s tariff discourse, nor an end to market volatility.

“Tariffs are seen by investors as a persistent risk, not a singular event,” noted Mandy Xu, head of derivatives market intelligence at Cboe Global Markets, highlighting that continued market volatility is anticipated.