Wall Street faced its worst trading day since the COVID-19 pandemic as Donald Trump’s aggressive new tariff policy sent shockwaves through the global economy. With the S&P 500 plunging nearly 5%, about $2 trillion in value was wiped off the index, triggering mass selloffs and deepening fears of a looming recession.
America First Turns Risky
Trump’s latest move under his “America First” economic agenda introduced reciprocal tariffs, including a 26% levy on Indian imports, and even higher duties for other major economies like Vietnam (46%), China (34%), and Sri Lanka (44%).
This unexpected tariff surge is now being blamed for rattling investor confidence, dragging the Russell 2000 down 20% from its 2021 peak, and causing the Bloomberg Dollar Spot Index to record its sharpest intraday drop since its inception in 2005.
Flight to Safety as Recession Fears Grow
With investors ditching equities, bond markets surged, pushing Treasury yields below the key 4% level. Experts say the market now sees a 50% chance of four Fed rate cuts this year.
“If these tariffs stick, the economy is going to slow down,” said Mary Ann Bartels of Sanctuary Wealth. “There’s no place to hide except fixed-income markets.”
Markets in Freefall Across the Board
Key Market Losses:
- S&P 500: -4.8%
- Nasdaq 100: -5.4%
- Dow Jones: -4%
- Russell 2000: -6.6%
- Bitcoin: -4.3%
- WTI Crude: -6.9%
The Bloomberg Magnificent 7 Index also dropped 6.7%, highlighting the broad impact across sectors.
Expert Warnings & Outlook
Legendary investor Bill Gross compared the current scenario to the end of the gold standard in 1971, cautioning investors:
“Don’t try to catch a falling knife.”
Economists from Barclays and Nomura project slower GDP growth (between 0.1% contraction to 0.6% growth in 2025), alongside rising inflation, sparking fears of stagflation—a dreaded combination of slowing growth and rising prices.
What’s Next for Markets?
With Fed Chair Jerome Powell set to speak and the US jobs report around the corner, investors are bracing for more volatility. Analysts believe that negotiations to soften the tariffs might emerge, but the damage to market sentiment has already been done.
“We’ve entered the first stage of this calamity: peak uncertainty,” said Irene Tunkel at BCA Research.