The US stock market continued to plunge for a third straight day after President Donald Trump announced surprise tariffs on nearly all of the country's major trading partners. The drastic drop comes after last week's Dow Jones plunged more than 2,200 points, while the S&P 500 fell 6% in a single day, its worst performance since the pandemic hit in March 2020. The Nasdaq index also plunged into a bear market after falling 22% from its high.
Investors had hoped the Trump administration would reverse course and delay the implementation of retaliatory tariffs scheduled to begin on April 9, but those hopes were dashed as the President and his advisers remained adamant in defending the move. Trump reportedly said that "sometimes bitter medicine has to be swallowed to solve problems," referring to the US trade deficit with China, which has reached trillions of dollars.
Reactions from other countries have also begun to weigh on the market. China immediately imposed a 34% tariff on all imports from the US, while Canada and the European Union are also preparing to retaliate. Although more than 50 countries have reportedly contacted the US to begin talks, the Trump administration has warned that the talks will not resolve the issue anytime soon.
On Wall Street, selling pressure intensified as hedge funds were forced to sell risky assets to meet margin calls. This caused the CBOE Volatility Index (VIX) to surge to 50, an extreme level rarely seen except in very volatile market conditions. The fall also spread to global markets, with US crude oil prices plunging below $60 a barrel and Bitcoin falling below $77,000. Hong Kong’s Hang Seng Index fell by 13%, its worst drop since 1997, while Germany’s DAX index fell by up to 10%.
Leading economists and investors have warned that the White House’s aggressive approach could trigger a “nuclear economy” if not stopped soon. Bill Ackman, a prominent fund manager, said the President has lost the trust of the global business community, and called on the administration to take time to thoroughly reevaluate its tariff strategy. Otherwise, he warned, the US economy could face a crisis of its own making.
