Markets around the world tumbled on Thursday after President Trump announced sweeping tariffs on major trading partners, including the European Union and Japan. The initial market reaction suggested that the scale of the tariffs had come as a surprise to investors.
Futures on the S&P 500, which allow investors to trade the index outside normal trading hours, slumped more than 3 percent.
Asian and European stock markets fell sharply, with benchmark indexes dropping more than 3 percent in Japan and nearly 2 percent in Hong Kong, South Korea, Germany, and France. The U.S. dollar also fell, dropping more than 1 percent against a basket of other major currencies.
Trump’s Tariffs: A Shock to the System
Speaking at a White House ceremony on Wednesday, Mr. Trump announced a 10 percent baseline tariff on all imports.
Additionally, country-specific tariffs included an extra 34 percent tax on Chinese imports—on top of a recent 20 percent tariff—along with 20 percent on goods from the European Union and 24 percent on Japanese imports.
“The numbers are shockingly high compared to what people were expecting and it is inexplicable in many ways,” said Peter Tchir, head of macro strategy at Academy Securities. “I think it’s a disaster.”
The Trump administration had modified its tariff estimates based on perceived currency manipulation and other factors, a move that left analysts questioning the methodology. “
Trump is going to war with countries on this,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “It’s ridiculous. It shows no comprehension as to what he is doing to other countries. And it is going to hurt the U.S.”
Investors Seek Safety Amid Uncertainty
Fearing economic turmoil, investors sought refuge in government debt. The yield on the 10-year U.S. Treasury bond fell to 4.08 percent, its lowest since October. Commodity markets also felt the strain, with Brent crude oil, the international benchmark, dropping 4 percent to around $71.90 a barrel.
The Stoxx Europe 600 fell 1.7 percent, with sectors including banking, technology, and consumer goods all suffering. Companies tied to consumer brands took a hit as tariffs targeted manufacturing hubs for shoes and clothing.
Vietnam faced a 46 percent tariff, while Indonesian goods were hit with a 32 percent tariff. As a result, shares of Adidas and Puma each dropped about 9 percent in Frankfurt, and Pandora, a Danish jewelry company with manufacturing in Thailand, tumbled 12 percent. Nike’s shares fell more than 8 percent in premarket trading in New York.
Major Corporations Feel the Impact
Global trade fears also weighed on shipping and banking stocks. Shares in Maersk, the Danish shipping giant, fell 7 percent, while major European banks, including HSBC, Commerzbank, and Deutsche Bank, dropped more than 4 percent.
Japan’s Nikkei 225 index, which had already entered a correction earlier in the week, was jolted again Thursday. “The announcement of a 24 percent tariff on Japanese products caught analysts and trade experts in Tokyo off guard,” the article noted.
Executives had hoped that Japan’s historically low average tariff rate would spare it from heavy penalties.
The uncertainty surrounding tariff levels and their duration has made it difficult for investors, economists, and policymakers to gauge the full impact on consumers and businesses.
According to Olu Sonola, head of U.S. economic research at Fitch Ratings, “The U.S. tariff rate on all imports is now around 22 percent, from 2.5 percent in 2024.” He added that this level was last seen around 1910.
Tech and Auto Stocks Sink
Tech stocks were among the hardest hit. The Nasdaq Composite index, which is heavily weighted with tech stocks, was down almost 13 percent from its December peak. In premarket trading, shares in Apple dropped more than 6 percent, Amazon fell nearly 5 percent, and Nvidia and Palantir each lost about 3 percent.
Automakers also suffered, with shares of Toyota falling more than 5 percent and South Korea’s Samsung Electronics losing nearly 3 percent.
Gold Surges as Investors Brace for More Turbulence
With investors seeking safe-haven assets, gold prices surged 19 percent in the first three months of the year, marking its biggest quarterly rise since 1986. On Thursday, gold traded at over $3,100 per troy ounce.
While some fear that tariffs could stoke inflation, falling bond yields and a weaker U.S. dollar suggest that many investors are more concerned about slowing global economic growth. The dollar index fell 1.1 percent, marking its worst day in over a month.
Tariff Uncertainty Keeps Markets on Edge
Some investors had hoped Wednesday’s tariff announcement would bring clarity to financial markets.
Instead, it added more uncertainty. “Investors no longer see tariffs as a one-time event risk, but an always-present risk,” said Mandy Xu, head of derivatives market intelligence at Cboe Global Markets. She added that market expectations are for volatility to persist.
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