Global Markets Plunge As Trump’s Tariffs Trigger Fears of Recession

The United States financial markets are facing one of their worst meltdowns since the COVID-19 pandemic following the announcement of reciprocal tariffs by former President Donald Trump on April 2. Wall Street has entered a steep decline for the second consecutive day, raising alarms over a potential global economic downturn, per Hindustan Times.

The Dow Jones Industrial Average dropped by 5.5 per cent, while the S&P 500 tumbled by 5.97 per cent on Friday. According to a report by AFP, the market fallout triggered by Trump’s "Liberation Day" tariffs has wiped out nearly $6 trillion in value, severely affecting the investment and retirement savings of millions of Americans.

Despite the financial turbulence, Trump has remained defiant. In a post on his social media platform Truth Social, he dismissed concerns over the market crash, calling it “a great time to get rich” and affirmed that his policies would remain unchanged.

“To the many investors coming into the United States and investing massive amounts of money, my policies will never change,” he wrote in all caps, emphasising that the tariffs would ultimately supercharge the U.S. economy.

Trump believes the new tariff regime will compel companies to shift manufacturing back to the U.S., spurring job creation and domestic production. However, market analysts remain sceptical, pointing out that the current economic indicators suggest instability and risk rather than revival.

Meanwhile, China has responded aggressively to the U.S. tariffs, announcing a 34 per cent duty on American goods, effective April 10. In response, Trump accused China of “panicking” and miscalculating its strategy. In a retaliatory move, China has also limited the export of critical rare earth elements such as scandium, yttrium, and dysprosium—materials vital for high-tech industries, including electronics and medical devices.

This development could significantly impact U.S. industries, as China is the leading supplier of these rare earth compounds. According to a Bloomberg report citing the U.S. Geological Survey, between 2020 and 2023, China accounted for 70 per cent of U.S. rare earth imports.
China has also threatened legal action against the United States at the World Trade Organization (WTO), challenging the legality of the tariffs under international trade laws.

ALSO READ: Startup Leaders Hit Back At Piyush Goyal’s Remarks On Quick Commerce, Innovation

Economists warn that the escalating trade tensions could push not only the U.S. but also global markets toward a recession. While there is no universally accepted definition, the International Monetary Fund (IMF) broadly describes a recession as a sustained decline in economic activity, typically measured by two consecutive quarters of contraction in real GDP.

With markets in turmoil and uncertainty looming, investors and global stakeholders are closely monitoring the unfolding trade war and its broader economic implications.