- Dow Jones plunges over 2,200 points, entering correction territory with a 5.5% drop
- Nasdaq Composite enters bear market, falling 5.8% on tech selloff
- China retaliates with 34% tariffs on all US goods, escalating trade war fears
- Fed Chair Powell warns of higher inflation and uncertain rate path
Market Meltdown: Tariffs and Trade War Rattle Wall Street
US stock markets suffered their sharpest losses since 2020 on Friday, with the Dow Jones Industrial Average (^DJI) plunging more than 2,200 points, or 5.5%, after a double shock from China’s tariff retaliation and Federal Reserve Chair Jerome Powell’s warning on inflation and growth. The dramatic selloff pushed the Dow into correction territory, as investors braced for deepening trade tensions and mounting economic risks.
The S&P 500 (^GSPC) dropped nearly 6%, marking its worst weekly performance in over four years. Meanwhile, the Nasdaq Composite (^IXIC) tumbled 5.8%, officially entering bear market territory, driven by a broad tech rout.
Markets were rocked after China announced a sweeping 34% tariff on all US imports, set to take effect April 10. The move directly matched the additional 34% duties imposed by former President Donald Trump just one day earlier, escalating fears of a full-blown trade war between the world’s two largest economies.
While economic data released Friday showed some resilience — with the US adding 228,000 jobs in March — it was overshadowed by geopolitical tensions. The unemployment rate ticked up slightly to 4.2%, but strong hiring could add pressure on the Fed’s policy dilemma.
For the first time, Fed Chair Jerome Powell acknowledged the economic threat posed by the new tariffs, stating they were “higher than anticipated” and casting doubt on the central bank’s policy trajectory. “It’s too soon to say what the proper rate path should be,” Powell remarked, suggesting a shift in focus from inflation control to shielding the economy from slowdown.
Traders responded swiftly, pricing in five potential rate cuts this year, betting that the Fed will pivot to support growth amid growing recession fears.
On social media, Trump doubled down, asserting, “My policies will never change,” and accusing China of miscalculation: “They played it wrong,” he warned in a Truth Social post.
As Wall Street grapples with renewed volatility and the return of protectionist policies, analysts caution that investor sentiment may remain fragile in the weeks ahead.
US stocks cratered on Friday with the Dow Jones Industrial Average (^DJI) plunging more than 2,200 points after China stoked trade-war fears and Fed Chair Jerome Powell warned of higher inflation and slower growth stemming from tariffs.
The Dow pulled back 5.5% to enter into correction territory. Meanwhile, the S&P 500 (^GSPC) sank nearly 6%, as the broad-based benchmark capped its worst week since 2020. The tech-heavy Nasdaq Composite (^IXIC) dropped 5.8% to close in bear market territory.
The major averages added to Thursday’s $2.5 trillion wipeout after China said it will impose additional tariffs of 34% on all US products from April 10 — matching the extra 34% duties imposed by Trump on Wednesday. Economists are warning that with tariffs as-is, the risk of a US recession is rising. The monthly jobs report, unusually overshadowed Friday, showed a labor market that held steady ahead of Trump’s biggest tariffs. The US added 228,000 jobs in March, beating estimates, though the unemployment rate ticked up to 4.2%.
Meanwhile, Federal Reserve Chair Powell for the first time addressed the reality of the tariffs, saying they were “higher than anticipated.” He said it is “too soon to say” what the proper rate path should be. Traders have ramped up bets on interest rate cuts this year to five, as the Fed is expected to set its efforts to cool inflation aside to tackle the bigger risk of economic slowdown.
Trump, posting on Truth Social on Friday, added to fears by saying that his policies “will never change” and warning that China “played it wrong.”
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