U.S. Stocks Tremble Amid Escalating Tariff Battles
U.S. stocks experienced another nosedive during Monday’s turbulent trading session as the White House stood firm despite the shockingly high tariff rates on major U.S. trading partners, leading to significant market disruptions. Presently, President Trump has threatened even steeper tariffs against China as both nations exchanged retaliatory threats.
The S&P 500 dropped by 0.8%, drawing its downturn from its February peak to nearly 20%, signaling a bear market in the eyes of Wall Street. The Dow Jones Industrial Average plunged 522 points, a 1.4% decrease, following unprecedented consecutive 1,500-point losses to conclude last week. The Nasdaq Composite sank by 1%, continuing its descent further into bear market territory, as investors cashed out of their successful tech holdings. The Nasdaq now stands 24% below its peak.
Briefly after the market opened, stocks attempted a rally, edging the Dow Jones Industrial Average into positive figures. Rumors of a temporary halt in tariffs circulated across trading floors and on social media, possibly fueling this upward swing. However, the White House dismissed such gossip, labeling it “fake news” in a CNBC response.
The unilateral 10% tariff, initially imposed by Trump, began on Saturday. Investors had hoped over the weekend for news of fruitful negotiations between the Trump administration and other nations to reduce tariff rates or, at the very least, a postponement of reciprocal tariffs slated for April 9. Instead, both Trump and his senior advisors minimized the market downturn. On Sunday night, Trump remarked on the market upheaval: “I don’t want anything to drop, but sometimes remedies are necessary to resolve problems.”
On Monday, Trump further escalated tensions with China via Truth Social by stating, “If China does not retract its 34% increase over their longstanding trade misconduct by tomorrow, April 8th, 2025, the United States will enforce an additional 50% tariff on China, effective April 9th. Moreover, all discussions with China about their requested meetings with us will be canceled!”
The mounting concern on Wall Street suggested the sell-off could become a self-propelling force, as hedge funds might be compelled to offload equities and other high-risk assets to secure cash needed for margin calls. The CBOE Volatility Index, often used as a measure of fear in the markets, surged to a level of 50 on Monday, a rare severity typically observed only during bear markets.