Global Markets Plunge As Trump’s Aggressive Tariffs Unsettle Investors

Global stock markets plunged, and investors flocked to safe-haven assets after US President Donald Trump announced harsher-than-expected reciprocal tariffs, heightening concerns over inflation and economic growth, per a CNBC report.

Futures for the S&P 500 fell by more than 3.5 per cent, while Nasdaq 100 contracts dropped 4.5 per cent. Asian markets also opened lower on Thursday, with stocks in Australia, Japan, and South Korea experiencing sharp declines. Meanwhile, US 10-year Treasury yields dipped as investors shifted towards defensive assets, boosting the Japanese yen and gold, which surged to a new record high.

Trump stated on Wednesday that the US would impose a minimum 10 per cent tariff on all exporters to the country alongside additional levies on around 60 nations. The policy includes significantly higher rates for major trade partners such as China, the European Union, and Vietnam.

Wall Street Sentiment Turns Cautious

Just two months into Trump’s presidency, investor sentiment on Wall Street has shifted from initial optimism to growing unease. Concerns about how these tariffs will impact global trade and economic stability have led central banks to account for potential inflationary effects. Equity analysts have also lowered their forecasts for US stocks, fearing retaliatory measures from affected countries.

“Eye-watering tariffs on a country-by-country basis scream ‘negotiation tactic,’ which will keep markets on edge for the foreseeable future,” said Adam Hetts of Janus Henderson Investors.

The announcement came after three consecutive days of gains for the S&P 500 while quashing hopes that Trump’s tariff policy would be less aggressive. Investors now brace for extended trade negotiations in an already slowing global economy as businesses and consumers adjust to the new trade landscape.

Economic Impact and Industry Reactions

Growth-sensitive commodities also took a hit, with West Texas Intermediate (WTI) crude oil and copper—often viewed as indicators of global economic activity—both dropping at least 2 per cent in early Asian trading.

However, the White House confirmed that steel and aluminium imports would not be subject to these new reciprocal tariffs, offering some relief to domestic industries already burdened by a 25 per cent duty on these essential materials.

US Treasury Secretary Scott Bessent urged trade partners not to retaliate against the new tariffs. “As long as you don’t retaliate, this is the high end of the number,” Bessent said in an interview with Bloomberg Television.

Michael O’Rourke of Jones Trading Institutional Services warned that the tariffs would likely slow trade, increase costs, and squeeze profit margins. “This will further decelerate the economy by creating friction and distortion in global trade. I think we need to expect retaliation, which will likely lead to further escalation,” he said.

Despite widespread concerns, some market experts see a silver lining. Steve Chiavarone of Federated Hermes suggested that Wednesday’s announcement might represent the most extreme tariff measures, with the possibility of future reductions through negotiations. “This could create a selloff in the short term that presents a buying opportunity,” noted Chiavarone.

“A worst-case scenario would have been lower rates with the threat of escalation. At this point, I’d prefer higher rates with the potential to de-escalate,” he added.

Stock Market Impact

Companies most vulnerable to the new tariffs saw steep declines in late New York trading. Retail giants such as Nike Inc., Gap Inc., and Lululemon Athletica Inc.—all of which rely on Vietnamese goods and factories—fell by at least 7 per cent. Apple Inc., whose supply chain is heavily dependent on China, dropped as much as 6.9 per cent. Semiconductor firms, including Nvidia Corp. and Advanced Micro Devices Inc., also declined, alongside industrial giants Caterpillar Inc. and Boeing Co.

Meanwhile, sources familiar with the situation reported that China had already begun restricting domestic companies from investing in the US ahead of the tariff announcement. This move could provide Beijing additional leverage in upcoming trade negotiations with the Trump administration.