Trump tariffs: Dow drops 1,300 after China retaliates

NEW YORK (AP) — The worldwide sell-off for monetary markets slammed into a better, scarier gear. The S&P 500 plummeted 6% Friday, the Dow Jones Industrial Common plunged 5.5% and the Nasdaq composite dropped 5.8%. Markets are going through their worst disaster because the COVID crash after China matched President Donald Trump’s massive elevate in tariffs in an escalating commerce conflict. Not even a better-than-expected report on the U.S. job market was sufficient to cease the slide. The value of oil slid to its lowest stage since 2001.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows under.

NEW YORK (AP) — The sell-off for monetary markets worldwide is slamming into a better, scarier gear on Friday.

The S&P 500 tumbled 5.7% as Wall Road’s worst disaster because the COVID crash deepened after China matched President Donald Trump’s massive elevate in tariffs introduced earlier this week. The transfer will increase the stakes in a commerce conflict that might finish with a recession that hurts everybody. Not even a better-than-expected report on the U.S. job market, which is normally the financial spotlight of every month, was sufficient to cease the slide.

The Dow Jones Industrial Common plunged 2,034 factors, or 5%, and the Nasdaq composite was 5.6% decrease, with an hour remaining in buying and selling.

Up to now there have been few, if any, winners in monetary markets from the commerce conflict. European shares dropped roughly 5%. The value of crude oil tumbled to its lowest stage since 2021. Different fundamental constructing blocks for financial progress, reminiscent of copper, additionally noticed costs slide on worries the commerce conflict will weaken the worldwide economic system.

China’s response to U.S. tariffs brought on a right away acceleration of losses in markets worldwide. The Commerce Ministry in Beijing stated it will reply to the 34% tariffs imposed by the U.S. on imports from China with its personal 34% tariff on imports of all U.S. merchandise starting April 10. The USA and China are the world’s two largest economies.

Markets briefly recovered a few of their losses after the discharge of Friday morning’s U.S. jobs report, which stated employers accelerated their hiring by extra final month than economists anticipated. It’s the most recent sign that the U.S. job market has remained comparatively stable by means of the beginning of 2025, and it’s been a linchpin maintaining the U.S. economic system out of a recession.

However that jobs knowledge was backward wanting, and the worry hitting monetary markets is about what’s to come back.

“The world has modified, and the financial circumstances have modified,” stated Rick Rieder, chief funding officer of worldwide fastened revenue at BlackRock.

The central query wanting forward is: Will the commerce conflict trigger a worldwide recession? If it does, inventory costs will seemingly want to come back down much more than they’ve already. The S&P 500 is down roughly 17% from its document set in February.

Trump appeared unfazed. From Mar-a-Lago, his personal membership in Florida, he headed to his golf course just a few miles away after writing on social media that “THIS IS A GREAT TIME TO GET RICH.”

The Federal Reserve might cushion the blow of tariffs on the economic system by chopping rates of interest, which might juice issues by encouraging corporations and households to borrow and spend. However the Fed might have much less freedom to maneuver than it will like.

Fed Chair Jerome Powell stated Friday that tariffs might additionally drive up expectations for inflation. That may very well be extra damaging than excessive inflation itself, as a result of it could actually drive a vicious cycle of habits that solely worsens inflation. U.S. households have already stated they’re bracing for sharp will increase to their payments.

“Our obligation is to maintain longer-term inflation expectations nicely anchored and to make sure {that a} one-time improve within the worth stage doesn’t change into an ongoing inflation drawback,” Powell stated.

That would point out a hesitance to chop charges as a result of decrease charges may give inflation extra gasoline.

A lot will depend upon how lengthy Trump’s tariffs stick and how much retaliations different nations ship. A few of Wall Road is holding onto hope that Trump will decrease the tariffs after prying out some “wins” from different nations following negotiations. In any other case, many say a recession appears to be like seemingly.

Trump has stated Individuals might really feel “some ache” due to tariffs, however he has additionally stated the long-term objectives, together with getting extra manufacturing jobs again to the US, are value it. On Thursday, he likened the state of affairs to a medical operation, the place the U.S. economic system is the affected person.

“For buyers taking a look at their portfolios, it might have felt like an operation carried out with out anesthesia,” stated Brian Jacobsen, chief economist at Annex Wealth Administration.

However Jacobsen additionally stated the following shock for buyers may very well be how rapidly tariffs get negotiated down. “The pace of restoration will depend upon how, and the way rapidly, officers negotiate,” he stated.

Trump stated Friday that an official from Vietnam stated his nation already “desires to chop their Tariffs all the way down to ZERO if they’re able to make an settlement with the U.S.” Trump additionally criticized China’s retaliation, saying on his Fact Social platform that “CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”

On Wall Road, shares of corporations that do a lot of enterprise in China fell to a few of the sharpest losses.

DuPont dropped 12% after China stated its regulators are launching an anti-trust investigation into DuPont China group, a subsidiary of the chemical big. It’s certainly one of a number of measures concentrating on American corporations and in retaliation for the U.S. tariffs.

GE Healthcare acquired 12% of its income final yr from the China area, and it fell 14%.

In inventory markets overseas, Germany’s DAX misplaced 5%, France’s CAC 40 dropped 4.3% and Japan’s Nikkei 225 fell 2.8%.

Within the bond market, Treasury yields fell, however they pared their drops following Powell’s warning about inflation. The yield on the 10-year Treasury fell to 4.00% from 4.06% late Thursday and from roughly 4.80% early this yr. It had gone under 3.90% within the morning.

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AP Writers Jiang Junzhe, Huizhong Wu and Matt Ott contributed.