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Trump’s tariffs trigger $2.5 trillion wipeout on Wall Street

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Following tariff impositions, Wall Street experienced a significant collapse, with $2.5 trillion evaporating from the market.

US President Donald Trump’s recent tariff policies, aimed at reshaping the global economic order, have wiped out approximately $2.5 trillion in market value from Wall Street stocks.

The President stated on Thursday evening that he “expected” his plans to raise tariffs to the highest level in over a century would cause turmoil in financial markets, adding, “The economy had too many problems… it was a dying patient.”

Although his announcement the previous day of a 10% general tax and higher tariffs on numerous countries shook investor confidence, he suggested the tariffs would herald “a thriving economy.”

According to calculations by the Financial Times (FT), based on FactSet data, the S&P 500 fell by 4.8% on Thursday, reducing the index’s market capitalization by $2.48 trillion.

The technology-heavy Nasdaq Composite dropped by 6%, marking its worst day since the 2020 coronavirus crisis. On Friday, European stocks extended their losses, with the Stoxx Europe 600 falling by 1% in early trading.

Japan’s Topix index closed down by 3.4%, South Korea’s Kospi index by 0.9%, and Vietnam’s Ho Chi Minh index by 3.7%.

Markets in China, Hong Kong, and Taiwan were closed due to a national holiday.

The dollar, which had already fallen by 1.7% against a basket of major currencies on Thursday, dropped a further 0.2% on Friday.

The declines erased gains made since Trump’s election victory in November.

Francesco Pesole, a foreign exchange strategist at ING, noted, “The collapse is a loss of confidence in dollar-denominated assets in general. This is a vote of no confidence against Trump’s [first] 100 days.”

IMF Managing Director Kristalina Georgieva warned that the Trump administration’s new tariffs posed “a significant risk” to the global economic outlook “at a time of slowing growth.”

Economists predict that the new tariffs will fuel inflation and hit growth, with US bank stocks falling due to recession fears; the sector’s KBW index fell by 9.9%.

Shares of Apple, the world’s most valuable company, fell by 9.3%, wiping over $300 billion from its market value, marking Apple’s largest-ever drop in market capitalization.

Nvidia and Tesla also experienced significant declines.

Global oil benchmark Brent crude fell by 6.7% to $69.94 a barrel.

Investors flocked to US Treasury bonds, seen as a safe haven during market turbulence. Short-dated bonds were the biggest beneficiaries, with two- and three-year yields seeing their largest movements since August 2024.

Short-dated bonds move on interest rate expectations, and Thursday’s yield increase suggests investors expect more interest rate cuts from the Fed. Yields move inversely to prices.

Trump argues that the tariffs will revive American manufacturing, encourage investment, prevent other countries from “robbing the US,” and generate trillions of dollars in revenue to fund tax cuts.

However, there are signs of tension within the US. Automaker Stellantis said it would lay off 900 workers at five US factories as a result of temporarily halting production in Canada and Mexico in response to Trump’s separate 25% tariffs on foreign automobile imports.

Consumer-focused groups, including sportswear group Nike and electronics retailer Best Buy, were among the worst affected due to concerns about how the latest tariffs would affect already pessimistic sentiment among American households and potential damage to supply chains.

Nike lost 14% in value, while Lululemon Athletica, Abercrombie & Fitch, and Gap also declined.

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