US Stock Markets Plunge Amid Escalating Trade War Fears

US stocks took a nosedive on Friday, set to extend a colossal $2.5 trillion loss. The decline came as China’s latest move heightened trade war concerns, just as investors were absorbing fresh employment statistics and anticipating a speech from Jerome Powell.

The Dow Jones Industrial Average plunged roughly 2.2%, slicing off around 1,000 points. Similarly, the S&P 500 tumbled about 2.5%, with the tech-heavy Nasdaq Composite dropping 2.6%.

Stock market declines worsened before the market opened after China announced it would impose additional tariffs of 34% on all US products starting April 10. This decision mirrors the extra 34% duties that President Trump declared on Wednesday.

These developments have intensified investor anxiety that countries might opt for retaliation over negotiation, potentially resulting in an extended global trade conflict.

Economists caution that the current tariffs increase the likelihood of a US recession. On Friday, the monthly jobs report indicated that the labor market remained stable despite the looming tariffs, with the addition of 228,000 jobs in March, exceeding forecasts, although the unemployment rate edged up to 4.2%.

Federal Reserve Chair Powell is scheduled to speak at a conference on Friday morning, where investors keenly await his comments on the economy and tariffs. This year, traders have increased their expectations for interest rate cuts to four, as the Fed prioritizes addressing the more significant threat of economic slowdown over curbing inflation.

On Thursday, the exodus from riskier assets was triggered by the severe retaliatory tariffs outlined by Trump, with global markets reeling and US stocks suffering their worst single-day downturn since 2020. Onboard Air Force One on Thursday, Trump told reporters that the implementation of his tariffs was ‘going very well,’ adding that he remained open to ‘phenomenal’ offers from other countries to negotiate reduced rates.