The Dow Jones Industrial Average fell sharply by 1,500 points on Wednesday (April 2) as fears of a trade war escalated following President Donald Trump's announcement of sweeping new tariffs. The tariffs, which start at a baseline of 10% and are higher for some countries, have raised concerns about global economic growth and inflation.
The S&P 500 and Nasdaq Composite also suffered significant losses, each dropping around 4%, as reported by CNBC. Shares of major multinational companies, including Nike and Apple, experienced declines of 13% and 8%, respectively. Retailers like Five Below and Dollar Tree were among the hardest hit, with Five Below losing 28% of its value.
The White House announced that the tariffs, effective April 5, are intended to counteract what President Trump described as unfair trade practices. "We will charge them approximately half of what they are and have been charging us," Trump stated during a press conference, as noted by The Boston Globe.
Investors have reacted by seeking safer assets, causing the benchmark 10-year Treasury yield to drop 15 basis points to 4.04%. The market volatility index (VIX) also spiked, reflecting heightened investor anxiety.
The global impact of the tariffs is already being felt, with European and Asian markets experiencing significant downturns. According to Yahoo Finance, Japan's Nikkei 225 and South Korea's Kospi index both saw substantial losses, while the Euro strengthened against the dollar as investors moved away from the greenback.
The tariffs are expected to face legal and diplomatic challenges as countries affected by the new measures assess their economic impact and consider their responses. The uncertainty surrounding these developments has contributed to the market's negative reaction.