Wall Street Plunges as Tariff Shock Rattles Markets

Wall Street was gripped by fear again on Thursday, with the S&P 500 sliding 4.5% as President Donald Trump’s aggressive tariff policies reignited concerns of a prolonged US-China trade war.

After a historic buying wave just a day earlier, investor optimism was short-lived. The escalation of tariffs — now totaling 145% on Chinese imports — sent equities, the dollar, and oil prices plummeting, while Treasury yields spiked unexpectedly.

Trade War Concerns Replace Market Euphoria

Traders and analysts alike warned that the economic cycle is being disrupted, as the effective freezing of Chinese trade hits projections for earnings, hiring, and GDP growth.

“Investors are sobering up… a 10% base tariff will sting,” said Michael Bailey at FBB Capital Partners.

The dollar fell to near its lowest level since October. Treasury yields climbed, with 30-year yields jumping nine basis points to 4.8% — an unusual move during times of panic.

Recession Fears Resurface Amid Mixed Fed Signals

Trump’s tariffs are reviving recession fears, despite earlier reassurances. Analysts say the 90-day tariff pause might only delay further pain.

“Volatility works in both directions — and it’s far from over,” said Nathan Thooft of Manulife Investment Management.

Even as US inflation data came in cooler for March, economists warn that tariff-driven inflation could build in coming months, placing more pressure on consumers and potentially the Federal Reserve to act.

China Retaliates, Deepening the Market Crisis

China quickly responded to Trump’s tariff hike with new levies of its own. As global trade partners dig in, Wall Street is pricing in a deeper and longer standoff.

“China read the ‘Trump fold’ as a sign of US weakness,” noted Nicolas Oudin of Gavekal Research.

Markets that had barely avoided bear territory in recent weeks are now bracing for prolonged uncertainty.

Companies Sound Alarm on Planning and Earnings

Corporate America is also reacting. Used-car giant CarMax delayed its financial roadmap, citing rising uncertainty. Novavax Inc. tumbled after a federal official questioned the strength of its Covid vaccine.

Other firms have warned that the trade war is making long-term planning “impossible.”

What’s Next for Wall Street?

Analysts at Goldman Sachs and SocGen have slashed S&P 500 targets, and Fed officials are split on how to react.

“A healthy drop in inflation is fine, but not if it’s due to cratering demand,” warned Bret Kenwell at eToro.

If current trends hold, Wall Street could end the year in the red — unless diplomatic breakthroughs shift sentiment.