Markets plunge with S&P 500 down 6% and Dow down 2,200 after China retaliates against Trump tariffs
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A deal to spin off the U.S. assets of TikTok was put on hold after China indicated it would not approve the deal following President Donald Trump's tariffs announcement this week, according to two sources familiar with the matter.
Trump on Friday extended by 75 days a deadline for ByteDance to sell U.S. assets of the popular short video app to a non-Chinese buyer, or face a ban that was supposed to have taken effect in January under a 2024 law.
The deal, the structure of which was largely finalized by Wednesday, according to one of the sources, would have spun off TikTok's U.S. operations into a new company based in the U.S. and majority-owned and operated by U.S. investors. ByteDance would hold a position of less than 20%.
The deal had been approved by existing investors, new investors, ByteDance, and the U.S. government, the source said.
ByteDance said early on Saturday that differences remained over the deal.
"(We are) still in talks with the U.S. government, but no agreement has been reached, and the two sides still have differences on many key issues," the company said in a statement on its official account on Chinese social media platform WeChat.
"By Chinese law, any agreement is subject to the relevant review procedures," it said.
The Chinese Embassy in Washington, asked about the status of a deal for TikTok, said in a statement: "China has stated its position on TikTok on multiple occasions. China has always respected and protected the legitimate rights and interests of enterprises and opposed practices that violate the basic principles of the market economy."
The Associated Press was first to report China's disapproval.
"The deal requires more work to ensure all necessary approvals are signed," Trump said on social media, explaining why he was extending the deadline he set in January that was supposed to have expired on Saturday. "We hope to continue working in good faith with China, which I understand is not very happy about our reciprocal tariffs."
China now faces a 54% tariff on goods imported into the United States after Trump announced he was hiking them by 34% this week, prompting China to retaliate on Friday. Trump has said he would be willing to reduce tariffs on China to get a deal done with ByteDance to sell the app used by 170 million Americans.
Item 1 of 2 A woman makes a video with a mobile phone to post on TikTok as she stands in Times Square in New York City, New York, U.S., March 13, 2024. REUTERS/Mike Segar/ File Photo
[1/2]A woman makes a video with a mobile phone to post on TikTok as she stands in Times Square in New York City, New York, U.S., March 13, 2024. REUTERS/Mike Segar/ File Photo Purchase Licensing Rights, opens new tab
Trump has said his administration was in touch with four different groups about a prospective TikTok deal. He has not identified them.
A major stumbling block to any deal for TikTok's U.S. business is Chinese government approval. China has not made a public commitment to allow a sale, and Trump's comments suggested renewed Chinese opposition.
"We look forward to working with TikTok and China to close the deal," Trump wrote on Friday.
"We do not want TikTok to 'go dark,'" Trump added.
Congress passed the measure last year with overwhelming bipartisan support, as lawmakers cited the risk of the Chinese government exploiting TikTok to spy on Americans and carry out covert influence operations. Democratic then-President Joe Biden signed it into law.
Some lawmakers have said Trump must enforce the law, which had required TikTok to stop operating by January 19 unless ByteDance had completed a divestiture of the app's U.S. assets. Trump began his second term as president on January 20 and opted not to enforce it.
The new Trump order will set a mid-June deadline for a deal.
The White House-led talks on the future of TikTok are coalescing around a plan for the biggest non-Chinese investors in parent company ByteDance to increase their stakes and acquire the app's U.S. operations, Reuters has reported.
The plan entails spinning off a U.S. entity for TikTok and diluting Chinese ownership in the new business to below the 20% threshold required by U.S. law, rescuing the app from a looming U.S. ban, sources have told Reuters.
Jeff Yass' Susquehanna International Group and Bill Ford's General Atlantic, both of which are represented on ByteDance's board, are leading discussions with the White House, Reuters has reported.
Walmart (WMT.N), opens new tab denied an ABC News report that it was also considering joining a group of investors in a deal for TikTok.
Tariff-stunned markets face another week of potential tariff turmoil, with fallout from President Donald Trump's sweeping import levies keeping investors on edge after the worst week for U.S. stocks since the onset of the coronavirus crisis five years ago.
Investors will look for signs the stock market may be close to at least a short-term bottom after Trump's tariffs rocked global asset prices this week. The benchmark S&P 500 (.SPX), opens new tab, lodged its biggest weekly drop since March 2020, and the Nasdaq Composite(.IXIC), opens new tab on Friday ended down more than 20% from its December record high, confirming the tech heavy index is in a bear market. The Dow Jones Industrial Average (.DJI), opens new tab, finished the week down well over 10% from its December record high, marking a correction for the blue-chip index.
More volatility could be in store ahead of the April 9 deadline Trump set for his reciprocal global tariffs to take effect, after his Wednesday announcement of the levies sent markets into a tailspin, raising fears of a global recession.
"The playbook on this is very, very unclear for everybody," said Jeffrey Palma, head of multi-asset solutions at Cohen & Steers. "There are all the questions about tariffs, retaliatory tariffs, where this ends and where it shakes out."
With the steep slide at the end of the week, the S&P 500 was down over 17% from its February 19 all-time closing high. In the two days following Trump's tariff announcement, S&P 500 companies lost about $5 trillion in market value, the largest amount ever in a two-day stretch, according to LSEG data.
"The markets could be their own worst enemy," said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. "This kind of drawdown ... could shake confidence and it could actually lead to weaker economic activity."
Trump's tariffs would amount to the highest trade barriers in more than a century, including a 10% baseline tariff on all imports and higher targeted duties on dozens of countries.
Investors downgraded their economic and earnings forecasts, with JPMorgan analysts raising the risk of a global recession this year to 60% from 40% before.
Some investors held out hope that Trump would negotiate deals in the coming days with some countries that would roll back some of the tariffs. Others were dubious that Trump would make any concessions.
Despite Trump's opportunity to pivot, "it is not lost on us that the window is shrinking and some damage to consumer and business confidence may have been done already regardless of the negotiated ending point to follow," Citi strategist Scott Chronert said in a note on Friday.
One sign of gloom: The Cboe Volatility Index (.VIX), opens new tab, an options-based measure of investor anxiety, registered its highest closing level since April 2020.
Bearish sentiment in the American Association of Individual Investors survey reached 61.9%, its highest reading since 2009 during the financial crisis.
With tariffs clouding the outlook, investors are wary of dour financial forecasts as U.S. companies kick off quarterly reports in earnest in the coming week. S&P 500 earnings are expected to have climbed 7.8% in the first quarter from the year-ago period, according to LSEG IBES.
"We see a lot of uncertainty in the earnings outlook at the moment," said RBC Capital Markets strategists in a Friday note, in which they cut their 2025 earnings forecast for the S&P 500.
The market selloff and increasing pessimism could mean the bar is lower for news that would buoy stocks, said Keith Lerner, co-chief investment officer with Truist Advisory Services.
"If you had anything that was even remotely positive right now, you could see a short-term spark because people are braced for the negative outcome," Lerner said.
Also in the coming week, the monthly consumer price index report on Thursday could help set a baseline for U.S. inflation ahead of the impact from tariffs, which are widely expected to add to pricing pressures.
Investors have been factoring in more Federal Reserve interest rate cuts this year in the wake of the tariff announcement, with Fed fund futures accounting for 100 basis points of easing this year, according to LSEG data.
Fed Chair Jerome Powell said on Friday that the tariffs are "larger than expected" and the economic fallout, including higher inflation and slower growth, likely will be as well.
Palma, of Cohen & Steers, said markets needed to show some stability in the coming days.
"We've had two really, really big days in terms of sharp market moves," Palma said. "What we really don't want to see is that it starts to create some vicious cycle that itself destabilizes the financial system."
March Jobs: Calm before the tariff storm 🌩️ 💡 In a week dominated by tariff headlines, the March Jobs report provided some good news, showing a labor market that remained resilient through the first quarter of 2025. However, this report reflects the strength of the labor market as of the “survey week”, which was the second week of March. Events since then, most notably the President’s tariff announcement on April 2nd, suggest a bleaker picture going forward. In the details: ➡️Nonfarm payrolls rose by 228k, well above expectations of 140k. That said, revisions put this report more in line with expectations, removing 48k jobs from the prior two months. Mild weather likely helped boost this figure, as the number of persons working part-time due to bad weather fell to its second-lowest March reading since 1977. ➡️Private payrolls rose 209k as services hiring spiked. Healthcare and social assistance (+78k) was, again, the best performing sector. Transportation and warehousing added 23k jobs, likely benefiting from increased activity ahead of tariffs. This sector has added 123k jobs since November, marking its best five-month stretch since 2022. Elsewhere, retail trade added 24k jobs as workers returned to work after a strike, while leisure and hospitality employment rose by 43k after two consecutive months of declines. Across goods-producing sectors, construction employment rose by 13k, but employment in mining and logging and manufacturing was largely unchanged. Government payrolls rose 19k, weighed down by a more modest than expected 4k decline in federal employment. With Challenger layoffs showing huge spikes in government job cuts, federal employment should remain a drag in the coming months. ➡️The unemployment rate ticked higher to 4.2%, although this was largely due to rounding. Positive weather effects were also apparent in wages and average hours worked. Wages rose 0.3% m/m and 3.8% y/y, down from 4% in February, while the average workweek held steady at 34.2 hours. ‼️ Overall, this report showed a labor market entering the second quarter in relatively strong position. That said, with tariffs set to rise to their highest levels in over a century, the path forward could prove difficult. Higher tariffs will likely pressure economic growth and corporate profits, both of which would slow hiring activity. This report did little to counteract the recent sell-off across equity markets, which was further intensified by the announcement of retaliatory tariffs from China. Markets are now pricing in four full cuts in 2025, up from three on April 1st, and a ~40% chance that the Fed cuts in May. That said, the April Jobs report should give investors a better read on tariff impacts, and a better idea of how the Federal Reserve might respond to recent developments.
Wall Street’s worst crisis since COVID slammed into a higher gear Friday.
The S&P 500 lost 6% after China matched President Donald Trump’s big raise in tariffs announced earlier this week. The move increased the stakes in a trade war that could end with a recession that hurts everyone. Not even a better-than-expected report on the U.S. job market, which is usually the economic highlight of each month, was enough to stop the slide.
The drop closed the worst week for the S&P 500 since March 2020, when the pandemic ripped through the global economy. The Dow Jones Industrial Average plunged 2,231 points, or 5.5% and the Nasdaq composite tumbled 5.8% to pull more than 20% below its record set in December.
So far there have been few, if any, winners in financial markets from the trade war. Stocks for all but 14 of the 500 companies within the S&P 500 index fell Friday. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries that the trade war will weaken the global economy.
China’s response to U.S. tariffs caused an immediate acceleration of losses in markets worldwide. The Commerce Ministry in Beijing said it would respond to the 34% tariffs imposed by the U.S. on imports from China with its own 34% tariff on imports of all U.S. products beginning April 10. The United States and China are the world’s two largest economies.
Markets briefly recovered some of their losses after the release of Friday morning’s U.S. jobs report, which said employers accelerated their hiring by more last month than economists expected. It’s the latest signal that the U.S. job market has remained relatively solid through the start of 2025, and it’s been a linchpin keeping the U.S. economy out of a recession.
But that jobs data was backward looking, and the fear hitting financial markets is about what’s to come.
“The world has changed, and the economic conditions have changed,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.
The central question looking ahead is: Will the trade war cause a global recession? If it does, stock prices may need to come down even more than they have already. The S&P 500 is down 17.4% from its record set in February.
Trump seemed unfazed. From Mar-a-Lago, his private club in Florida, he headed to his golf course a few miles away after writing on social media that “THIS IS A GREAT TIME TO GET RICH.”
The Federal Reserve could cushion the blow of tariffs on the economy by cutting interest rates, which can encourage companies and households to borrow and spend. But the Fed may have less freedom to move than it would like.
Fed Chair Jerome Powell said Friday that tariffs could drive up expectations for inflation. That could prove more damaging than high inflation itself, because it can drive a vicious cycle of behavior that only worsens inflation. U.S. households have already said they’re bracing for sharp increases to their bills.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.
That could indicate a hesitance to cut rates because lower rates can give inflation more fuel.
Much will depend on how long Trump’s tariffs stick and what kind of retaliations other countries deliver. Some of Wall Street is holding onto hope that Trump will lower the tariffs after prying “wins” from other countries following negotiations.
Trump has given mixed signals on that. On Friday, he said Vietnam “wants to cut their Tariffs down to ZERO if they can make an agreement with the U.S.” Trump also criticized China’s retaliation, saying on his Truth Social platform that “CHINA PLAYED IT WRONG, THEY PANICKED - THE ONE THING THEY CANNOT AFFORD TO DO!”
Trump has said Americans may feel “some pain” because of tariffs, but he has also said the long-term goals, including getting more manufacturing jobs back to the United States, are worth it. On Thursday, he likened the situation to a medical operation, where the U.S. economy is the patient.
“For investors looking at their portfolios, it could have felt like an operation performed without anesthesia,” said Brian Jacobsen, chief economist at Annex Wealth Management.
But Jacobsen also said the next surprise for investors could be how quickly tariffs get negotiated down. “The speed of recovery will depend on how, and how quickly, officials negotiate,” he said.
On Wall Street, stocks of companies that do lots of business in China fell to some of the sharpest losses.
DuPont dropped 12.7% after China said its regulators are launching an anti-trust investigation into DuPont China group, a subsidiary of the chemical giant. It’s one of several measures targeting American companies in retaliation for the U.S. tariffs.
GE Healthcare got 12% of its revenue last year from the China region, and it fell 16%.
All told, the S&P 500 fell 322.44 points to 5,074.08. The Dow Jones Industrial Average dropped 2,231.07 to 38,314.86, and the Nasdaq composite fell 962.82 to 15,587.79.
In stock markets abroad, Germany’s DAX lost 5%, France’s CAC 40 dropped 4.3% and Japan’s Nikkei 225 fell 2.8%.
In the bond market, Treasury yields fell, but they pared their drops following Powell’s cautious statements about inflation. The yield on the 10-year Treasury fell to 4.01% from 4.06% late Thursday and from roughly 4.80% early this year. It had gone below 3.90% in the morning.
If there was any remaining doubt, the unipolar U.S. moment is over. On January 30, newly installed U.S. Secretary of State Marco Rubio called time, opens new tab on the country’s three-decade-long run as the sole arbiter of global affairs, calling it an “anomaly”. A fortnight later, Secretary of Defense Pete Hegseth explained, opens new tab clearly the new dynamic when he described China as a “peer competitor” and told other members of the NATO alliance that the U.S. must henceforth focus on deterrence of its new superpower rival. Russia’s invasion of Ukraine, the conflicts in the Middle East, and the U.S. insistence that allies from Canada to Panama reject what it claims to be Chinese infiltration were already symptoms of a new, fundamentally bipolar world order. President Donald Trump’s blanket tariffs on global trading partners, which he unveiled on Wednesday, further underscore the shift.
International investment allocations, however, remain glaringly out of sync with this epochal geopolitical shift. For the past decade and a half, American capital markets have been the only game in town. As of December, net foreign ownership of U.S. assets hit an all-time high of just over $26 trillion, or almost 90% of the United States’ GDP, according to the U.S. Bureau of Economic Analysis. The U.S. stock market is so gargantuan – and richly valued – that it accounts for almost three-quarters of the MSCI World Index, opens new tab of developed market equities. Three companies – Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Microsoft (MSFT.O), opens new tab – each represent higher shares of the MSCI ACWI Index, opens new tab of global equities than the entire UK stock market. When it comes to investing, it is as if the American unipolar moment never ended.
The net result of this almighty disconnect is the prospect of a generational shift in asset allocations as investors seek to realign their portfolios with the new geopolitical reality. Where they should redeploy their capital, however, is no simple question. On the one hand, the opportunity set is larger than ever. Unlike during the original Cold War, three decades of globalisation mean investors today have access, opens new tab to large, liquid financial markets on all sides of the new strategic divides. On the other hand, the new world disorder is comprehensively upending global investment risk. Public finances are straining, opens new tab from myriad new stresses, trade and finance, opens new tab are facing dramatic new disruptions, and capital flows are undergoing sharp adjustments, opens new tab.
A line chart showing US net international investment position as % of GDP
One compelling category of investment destinations might be termed “inbetweeners”: those major emerging markets which combine investable financial markets with the economic and geopolitical heft to avoid wholesale alignment with either the U.S. or China. Investors will doubtless disagree about exactly which jurisdictions meet these two criteria. But at a minimum Brazil, Turkey, South Africa, the Gulf Cooperation Council countries, India, and Indonesia make the grade. That group alone makes the inbetweeners too big to ignore. They collectively account for more than a quarter of the globe’s working-age population; nearly a fifth of world GDP measured at purchasing power parity; just under a sixth of global active military personnel; and around a tenth of world trade and defence spending, respectively.
The thesis that strategic neutrality can yield tangible economic advantages, meanwhile, has historical precedent to back it up. In 1961, the leaders of 25 developing countries founded the Non-Aligned Movement, opens new tab (NAM) with the express intent of preserving autonomy in trade, technology, and financial relations with the Cold War’s two superpowers. Over the next two decades, that strategy paid off. Per-capita income growth in NAM countries notably outperformed the world average. Leading members which maximised the opportunity to borrow from and trade with both east and west pocketed even larger rewards. Egypt, Yugoslavia, and Indonesia grew their economies at average annual rates of 6.0%, 5.7%, and 5.4% a year, respectively, for 20 years straight.
In today’s era of far more integrated global trade and capital markets, the benefits of being on good terms with both the world’s superpowers are undoubtedly even bigger. For a taste of the advantages, look no further than financial centres such as Dubai and Singapore – the boomtowns luring international bankers from London and New York – or former backwaters such as Kazakhstan, which have become vibrant hubs of east-west trade. Playing the middleman in a global economy 10 times the size it was in the days of the original NAM is at least 10 times as valuable. Forget the regulatory and tax arbitrage that has been the key to optimising corporate capital structures and supply chains for the last three decades. It is geopolitical arbitrage which will unlock resilience and profitability in the new Cold War – and it is intermediaries that offer the obvious go-to locations for that service.
Yet while non-alignment served the original NAM very nicely in the 1960s and 70s, its members’ performance in the 1980s was less impressive. Between 1981 and 1991, the group’s per-capita income growth began to lag competitors in the western and eastern blocs. In Yugoslavia, which had enjoyed the most liberal access to trade and finance from both sides, income per head actually shrank. It turned out that the independence afforded by being indispensable to both sides in a polarised world could easily slip into policy indiscipline.
A bar chart showing GDP growth of NAM countries
That is a cautionary tale for investors attracted to today’s inbetweeners. Between 2000 and 2014, Saudi Arabia ran an average fiscal surplus of nearly 8% of GDP. For the last decade, extravagant investment projects such as the $500 billion NEOM development project have converted that into an average annual deficit of 6% of GDP. Last month, Turkish President Tayyip Erdogan’s main challenger Ekrem Imamoglu was detained on corruption charges, sending the country’s financial markets into free-fall. The disintegration of the unipolar world order may mean that valuable external constraints on in-between governance and public finances will evaporate as well.
The biggest threat to the inbetweeners’ bid for a share of the coming reconfiguration of global capital flows comes from an entirely different direction, however. The starkest difference between the original Cold War and the latest superpower showdown is the sudden U.S. repudiation of its long-time allies in Europe, North America, and Asia. That raises an obvious possibility. Maybe the real inbetweeners are now closer to home than developed-market investors think. The investment destinations that offer the biggest geopolitical arbitrage opportunity to refugees from the U.S.’s out-of-sync unipolar markets are none other than Europe, Canada, and Japan.
United States President Donald Trump’s sweeping new tariffs on American imports shocked governments and investors around the world, swiftly spurring both threats of retaliation and calls for negotiation as industries scrambled and global stocks tumbled.
China accused the U.S. of “bullying” and the European Union promised “robust” countermeasures, with French officials suggesting taxes to hit U.S. tech giants.
Yet the United Kingdom and Japan, among others, expressed hope for a deal with Trump and refrained from talk of retaliation against the world’s biggest economy, fearing that slapping their own tariffs on American goods would only make things worse.
Trump imposed a 34% levy on goods from China on top of an earlier 20% tariff, as well as a 20% tariff on the EU, 24% on Japan, and 25% on South Korea.
Trump has described the import taxes, ranging from 10% to 49%, as a way to reverse unfair treatment by American trading partners and draw factories and jobs back home.
Setting off for Florida from the White House on Thursday, he struck an optimistic note. “I think it’s going very well.”
“The markets are going to boom, the stock is going to boom and the country is going to boom,” Trump said.
China has already announced retaliatory measures
China, a key exporter to the U.S. of everything from clothing to kitchenware, has already announced a raft of retaliatory measures expected to raise prices for U.S. consumers.
“There are no winners in trade wars and tariff wars,” China’s Foreign Ministry spokesperson Guo Jiakun said. “It’s clear to everyone that more and more countries are opposing the unilateral bullying actions of the U.S.”
French President Emmanuel Macron met with representatives from key commercial sectors affected by the tariffs, like wines and spirits, cosmetics and aircraft, after urging businesses to suspend all investments in the U.S. “What would be the message of having major European players investing billions of euros in the American economy at a time when they’re hitting us?” Macron asked.
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U.S. President Donald Trump’s announcement of a new 20% tariff on the European Union drew a sharp rebuke from European Commission President Ursula von der Leyen. She said it was a major blow to the world economy and the consequences “will be dire for millions of people.”
European Commission President Ursula von der Leyen denounced Trump’s levies as a “major blow to the world economy” but held off announcing new countermeasures. She said the commission — which handles trade issues for the 27 EU member countries — was “always ready” to talk.
Analysts say there’s little to be gained from an all-out trade war, since higher tariffs can restrain growth and raise inflation.
“Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies.
“Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “The hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”
Italian Prime Minister Giorgia Meloni told Italian state TV on Thursday that she hoped for exactly that.
“We need to open an honest discussion on the matter with the Americans, with the goal — at least from my point of view— of removing tariffs, not multiplying them,’’ Meloni said.
The next target could be U.S. tech companies
Europe’s strategy so far has been to limit retaliation to a few politically sensitive goods, like whiskey and Harley-Davidson motorcycles, in an attempt to push the U.S. to the negotiating table.
Economists say that Europe could broaden the trade war to the vast services sector by targeting Big Tech — a category more vulnerable to retaliation because the U.S. exports more than it imports.
The EU response could include a tax on U.S. digital giants such as Google, Apple, Meta, Amazon, and Microsoft, as French officials have recommended.
Outgoing German Chancellor Olaf Scholz said the EU “must show that we have strong muscles.” But he expressed no appetite for sparking an all-out trade war that could hobble the bloc’s export-dependent economy.
“An agreement,” he said, “is best for prosperity in the U.S., for prosperity in Europe and for prosperity in the world.”
British Prime Minister Kier Starmer said his government would react with “cool and calm heads,” telling business leaders in London that he hoped to strike a trade deal with the U.S. that would see the tariffs rescinded.
“Nobody wins in a trade war, that is not in our national interest,” Starmer said.
U.S. President Donald Trump is seen on a screen as currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 3, 2025. (AP Photo/Ahn Young-joon)
People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025, in Tokyo.(AP Photo/Shuji Kajiyama)
Japan, the biggest foreign investor in the U.S. and its closest ally in Asia, plans to assess the impact of the tariffs, Chief Cabinet Secretary Yoshimasa Hayashi said, displaying a more conciliatory approach.
‘Blow to the world economy’
The round of tariffs jolted financial markets, with the U.S. Standard & Poor's 500 off 3.7% in afternoon trading.
The STOXX Europe 600 index fell 2.7%, and a 2.8% drop in Tokyo’s benchmark led losses in Asia. Oil prices sank more than $2 a barrel. Analysts fished for superlatives to convey the disruption to the global trading order as Trump’s announcement overturned decades of efforts to lower tariffs through free trade agreements and negotiations.
“The magnitude of the rollout — both in scale and speed — wasn’t just aggressive; it was a full-throttle macro disruption,” Stephen Innes of SPI Asset Management said.
With an average tariff of 25%-30%, the highest since the early 20th century, the U.S. has initiated a “radical policy reordering,” said Deutsche Bank’s Jim Reid.
The head of the World Trade Organization warned that U.S. protectionist measures will likely cause global trade volumes to drop by about 1% this year.
“I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade,” said WTO Director-General Ngozi Iweala-Okonjo.
Higher prices loom
The tariffs are not paid by the foreign countries they target, but by the U.S.-based companies that buy the goods to sell to Americans.
Now companies must decide whether to absorb the new taxes or pass them on to consumers in the form of higher prices.
The makers of Italy’s Parmigiano Reggiano cheese, for instance, say the new tariffs mean U.S. consumers will pay more for their crumbly pasta topping.
“Americans continued to choose us even when the price went up” after an earlier round of Trump tariffs in 2019, said Nicola Bertinelli, president of the Parmigian Reggiano Consortium. “Putting tariffs on a product like ours only increases the price for American consumers, without protecting local producers.”
The Consumer Brands Association, which represents big food companies like Coca-Cola and General Mills as well as consumer product makers like Procter & Gamble, warned that although its businesses make most of their goods in the U.S., they now face tariffs on critical ingredients — like wood pulp for toilet paper or cinnamon — that must be imported because of domestic scarcity.
“We encourage President Trump and his trade advisors to fine-tune their approach and exempt key ingredients and inputs to protect manufacturing jobs and prevent unnecessary inflation at the grocery store,” said Tom Madrecki, the association’s vice-president of supply chain resiliency.
On a Pacific island, incomprehension
An eye-popping 29% tariff imposed on Norfolk Island came as a shock to the remote South Pacific outpost’s 2,000 inhabitants, particularly as its governing nation, Australia, was hit with a far lower tariff of 10%.
“To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, said Thursday. “We’re scratching our heads here.”
Vladimir Putin’s Russia, meanwhile, was left off Trump’s list.
Payroll
hashtagEmployment was pleasantly surprised by the upside in March, albeit following downward revisions to January and February. The momentum in employment has slowed since the start of the year. March will likely be the high-water mark for the year, given layoff announcements in the federal government, their spillover effects and the expected impact ofhashtag#tariffs. Tariffs have already prompted some firms to idle production. We still expect thehashtag#The Fed will hold off on rate cuts until late in the year due to the stagflation triggered by tariffs unless something breaks in the financial markets.
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President Donald Trump’s tariffs are expected to drive up prices, and some shoppers aren’t waiting around, rushing to make purchases they fear will soon cost more.
Initial estimates suggest that new-vehicle sales surged at the end of March, driven by consumers jumping in before new tariffs pushed prices higher, according to Cox Automotive. The research firm said March sales blew past forecasts, marking the best month for sales volume in four years.
“Clearly, in the short term at least, shoppers have embraced a ‘better buy now’ attitude, betting on higher prices later this year,” Erin Keating, an executive analyst at Cox Automotive, wrote in an analysis.
Those fears are not entirely unfounded, with auto experts warning that Trump’s tariffs, particularly the levies on car parts, could cause production to plummet.
Wednesday’s “Liberation Day” marked a major escalation in a Trump-initiated trade war that may lead to higher prices for cars but also coffee, beauty products, electronics and a range of other goods.
Shortly after Trump’s announcement, billionaire businessman Mark Cuban told his social media followers they should consider buying “lots of consumables now” before prices rise.
Cuban added: “Even if it’s made in the USA, they will jack up the price and blame it on tariffs.”
Some shoppers appear to be heeding his advice.
“Now is the time to buy,” 50-year-old Noel Peguero told The Wall Street Journal as he loaded a 40-inch television from Hisense, a Chinese brand, into his car outside a Best Buy in New York City.
Melanie Moroz, who lives in West Virginia, told Business Insider she’s been stocking up on makeup, skincare and hair products amid the recent economic uncertainty.
A CreditCards.com survey in February found that 1 in 5 Americans were purchasing more items than usual, primarily due to concerns over Trump’s tariffs.
Others insist that now isn’t the time to panic-buy.
“These tariffs may not persist at anything like the amounts currently in the headlines,” Ron Lieber, the Your Money columnist for The New York Times, wrote Friday.
Lieber cautioned: “You also need to have real money — extra real money — to lay a bunch of things away in your residence. Many people don’t, and going into debt to buy extras of everything will probably erase any savings.”
Consumers may want to be especially careful not to overextend given the economic uncertainty ahead. Top economists recently raised the odds of a recession in the next year, and millions of Americans have watched the value of their retirement portfolios drop as stocks continue to slide.
Phew. What a week.
We're closing down our Live Page coverage of the continued market sell-off over Trump's tariff plans and the reaction from China and other trading partners.
From Trump's big reveal on tariffs exceeding expectations, to a very negative response from stocks, here is a round-up of the big stories in business and finance over the week to April 4:
More volatility could be in store ahead of the April 9 deadline Trump set for his reciprocal global tariffs to take effect.
