Financial markets tumble after Trump tariff announcement

Global financial markets, including in Asia were rocked on Wednesday by Donald Trump’s announcement of sweeping tariffs, targeting China and the European Union in particular, with the risk of undermining the international economy.

The US president laid out the new measures after Wall Street stock markets had closed. But his announcement still rippled through the markets that were open at the time, sending stock futures and bond yields lower, while gold surged to a new record high.

Stocks struggle

As the evening progressed, US futures fell sharply, with the Dow Jones dropping 2.4 percent at around 2345 GMT, the Nasdaq index plunging 4.2 percent, and the broader futures index for the S&P 500 falling 3.5 percent.

Wall Street has largely suffered from Trump’s various trade announcements in recent weeks.

“The silver lining for investors could be that this is only a starting point for negotiations with other countries and ultimately tariff rates will come down across the board,” Northlight Asset Management’s Chris Zaccarelli wrote in a note to clients.

“But for now traders are shooting first and asking questions later,” he added.

The share price of technology companies whose components are produced abroad also fell sharply, with Apple losing 7.4 percent after-hours, Nvidia falling 5.2 percent and TSMC declining 5.9 percent.

Futures markets are typically much more volatile than the regular indices.

The clothing sector was also hit especially hard, with a particularly heavy bill for China, where products will be hit by an additional duty of 34 percent from April 9, and Vietnam, where the new “reciprocal” rate will be 46 percent.

Brands whose clothes are partly made in China or Vietnam were sharply lower, with Gap down 8.5 percent after hours, Ralph Lauren falling 7.3 percent, and Nike losing 7.1 percent.

Tokyo’s Nikkei 225 index dipped more than 3.4%, but recovered slightly. It was down 2.9% at 34,699.52.

Trump said he was imposing a 24% “reciprocal tariff” on Japan, one of the United States’ closest allies.

South Korea, also an ally, was hit with a 25% tariff. Its benchmark Kospi slumped 1.9% soon after the opening, to 2,459.30.

In Australia, the S&P/ASX 200 fell 1.8% to 7,793.10.
The future for the S&P 500 dropped 3% while that for the Dow Jones Industrial Average lost 2%, auguring potential losses when U.S. markets reopen on Thursday (April 3, 2025).

On Wednesday (April 2, 2025), U.S. stocks whipped through another dizzying day before Mr. Trump’s unveiling of his “Liberation Day” tariffs.

The S&P 500 rose 0.7% to 5,670.97 after careening between an earlier loss of 1.1% and a later gain of 1.1%. It’s had a pattern this week of opening with sharp drops only to finish the day higher.

The Dow Jones Industrial Average added 0.6% to 42,225.32, and the Nasdaq composite climbed 0.9% to 17,601.05.

Elon Musk’s Tesla helped knock the market around after initially falling more than 6% following a report that it delivered fewer electric vehicles in the first three months of the year than it did in last year’s first quarter. It closed 5.3% higher.

Tesla is one of Wall Street’s most influential stocks because of its immense size, and it’s faced backlash due to anger about CEO Elon Musk’s leading the U.S. government’s efforts to cut spending.

On Wall Street, Newsmax fell 77.5% in its third day of trading to give back some of the meteoric gains from its debut at the start of the week. It surged 735% Monday and then another 179% on Tuesday.

Several airlines, meanwhile, flew higher to recover some of the sharp losses taken recently on worries that tariff-weary customers will fly less. United Airlines climbed 4.6%.

Financial markets around the world have broadly been shaky lately because of uncertainty about Trump’s trade war. He has said he wants tariffs to make the global system more fair and to bring manufacturing jobs back to the United States from other countries. But tariffs also threaten to grind down growth for the U.S. and other economies, while worsening inflation when it may be stuck above the Federal Reserve’s 2% target.

After the U.S. market closed, Mr. Trump declared a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States. The president held up a chart while speaking at the White House, showing the United States would charge a 34% tax on imports from China, a 20% tax on imports from the European Union, and 32% on Taiwan.

Mr. Trump earlier announced 25% tariffs on auto imports; levies against China, Canada and Mexico; and expanded tariffs on steel and aluminium. Trump has also put tariffs against countries that import oil from Venezuela and plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.

Treasury yields swung in the bond market, echoing the indecision seen in the stock market.

The yield on the 10-year Treasury fell as low as 4.11% in the morning from 4.17% late Tuesday (April 1, 2025) and from roughly 4.8% early this year. But it later rose to 4.18%. Higher yields can indicate higher expectations for the economy or for inflation

In other dealings early Thursday (April 3, 2025), U.S. benchmark crude plunged $2.08 to $69.63 per barrel. Brent crude, the international standard, gave up $2.06 to $72.89 per barrel.

The dollar fell to 148.07 Japanese yen from 149.28 yen. The euro rose to $1.0897 from $1.0855.

Safe-haven assets in demand

Investors flocked to gold, which has been setting new records in the face of trade uncertainties.

The yellow metal blew past its previous day’s record high after Donald Trump’s new announcements, and was trading at roughly $3,160 an ounce at around 2345 GMT.

The price of gold has jumped by close to 20 percent since the start of 2025.

The bond market also played its role as a safe haven, with the yield on the benchmark ten-year US Treasury, easing to 4.10 percent after Donald Trump’s announcement.

Bond yields move in the opposite direction to prices, with yields typically falling in the face of increased demand for bonds.

Weaker dollar

Within minutes of Trump’s first words on Wednesday, the dollar plunged by over one percent against the euro.

“The increased tariffs have been a negative factor for the US dollar,” Forex.com’s Matthew Weller told AFP.

One euro was equivalent to 1.04 dollars on the day Trump was inaugurated to his second term.

By 2345 GMT on Wednesday, it was worth around 1.09 dollars.

Bitcoin, the most popular cryptocurrency, also suffered from the White House announcements, falling more than three percent on Wednesday evening.

--Agencies